Robo advisors appeal to a younger generation of investors because of their low management fees and small investment amounts required. With Covid-19 creating much uncertainty in the stock market, this may be your ticket towards financial freedom.
Singapore robo advisors commands about $1.5 billion in assets under management, spread over about 105,000 users. This is but a fraction of our $3.4 trillion asset management industry, but they are increasingly becoming a ‘standard’ in the investment menu, especially among the digitally-savvy set.
But their growing popularity also means there are quite a few robo advisors to choose from. So, who do you pick and why? Here’s a look at five robo advisors in Singapore to help you find the perfect fit:
Fees: 0.8% per annum management fees for the first $25,000. Decreases by 0.1% each tier to a low of 0.2% for amounts above $1,000,000. Does not include ETF fees – estimated at 0.2% per annum (0.4% for its Income Portfolio) – or currency conversion fees of about 0.08%. Unlimited free withdrawals. Minimum investment: None for SGD deposits. $10,000 for its Income Portfolio
StashAway wins big marks for being the most transparent and user-friendly robo advisors in Singapore. It tells you every single one of its fees upfront, such as ETF fees and currency conversion fees – something many other robo advisors are less than transparent about.
Users can have exposure to 33 global ETFs for regular investments, six Singapore/Asia-focused ETFs for its Income Portfolio, and two money market funds for its cash management account, StashAway Simple.
However, like most robo advisors, you cannot select the ETFs yourself. You can only change something called your Risk Index score, and StashAway will have its own portfolio mapped to each score. The Risk Index tells you the riskiness of a portfolio, for instance, a 30% Risk Index score means that there is a 99% chance (based on Value at Risk methodology) that said portfolio won’t decline by more than 30% in a year.
On the downside, StashAway is one of the more expensive robo advisors out there. Despite its less-competitive fees, it has enjoyed strong popularity, likely because of the very reasons it ended up on this list – maximum transparency and user-friendliness.
Fees: No management fees for accounts up to $70,000, 0.3% p.a. thereafter. Does not include ETF fees and FX conversion fees of 0.2%. Exceeding 25 transactions per months will also incur an undisclosed custody and asset operating fee. Minimum investment: None, but at least $7,000 is recommended. Individual ETFs also have minimum balances.
Kristal.AI easily offers the best cost structure and greatest control among all robo advisors out there. With zero management fees up to S$70,000 and only 0.3% thereafter, investors focusing on expenses should have no issue choosing Kristal.AI immediately.
Furthermore, it also offers the greatest control. While the algorithm can create portfolios for you, you can also choose to go ‘DIY’ and construct your own portfolio out of individual ETFs (over 100 options available).
Despite its undisputed upsides, there are downsides. For one, it is not the most user-friendly or transparent. For instance, exceeding 25 transactions amount will also incur a broker fee – the amount of which it does not disclose. Its FX conversion fee of 0.2% is also higher than most. Finally, while zero minimum balances are technically true, individual ETFs may have their own respective minimum balances.
Fees: 0.4% p.a. flat on CPF/SRS funds, 0.60% for regular investments up to $200,000 and 0.05% for Cash Smart. Minimum investment and account size of $10,000
Endowus has two unique advantages over the competition. The first is you can invest funds in your CPF Ordinary Account, and do so at a flat management fee of 0.4% p.a.
Secondly, it allows you to invest with passive asset allocations (that are globally diversified in a market cap weighted manner), along with actively managed strategies. It has access to ‘active-passive’ funds, namely from the famous Dimensional Funds. Instead of merely tracking established indices, Dimensional Funds constructs its own indices based on its own ‘dimensions’ (such as asset growth).
The downside of this robo advisory is you need to inject a higher minimum investment amount of $10,000.
However, because all funds are SGD-denominated, there are no currency conversion fees and Endowus also explicitly refunds any ‘promotional commissions’ – known as trailer fees – that the fund manager might pay to Endowus.
Its fund selection is less extensive, at only 18. There are also only six model portfolios available, each based on different allocations between stocks and bonds. Another downside is its relatively high minimum investment and account size of $10,000.
Fees: 0.65% p.a. up to $20,000, 0.5% up to $100,000, 0.4% up to $500,000. Does not include ETF fees and a 0.10% currency conversion fee. Minimum investment: None
Syfe has one unique advantage that sets it apart from the rest: allowing you to get exposure to Singaporean real estate through its Singaporean REITs portfolio. While it’s true you can purchase individual REITs yourself, Syfe’s REITs portfolio tracks the SGX iEdge S-REIT Leaders Index, covering all the top Singaporean REITs. It would be difficult for retail investors to gain exposure to this index themselves. You can also opt for automatic risk management for this REITs portfolio.
Another advantage of using Syfe is its ability for you to get exposure to factor-based equity portfolios. Syfe’s Equity100 portfolio (comprising 10 ETFs) is weighted according to three different factors that will increase the weighting toward a specific type of stock – large-cap growth stocks with low volatility. This is similar to what Dimensional Funds does, except that Syfe does this itself.
Other than those advantages – and a complimentary call with a financial advisor – Syfe is a pretty standard robo advisor. Its fees are average, and so is its array of available funds and portfolios. Not including its REIT and Equity100 portfolio, it has a global portfolio consisting of a combination of 22 ETFs, with 11 risk options you can choose from.
Fees: 0.88% p.a. up to $50,000, 0.68% up to $100,000, 0.5% above $100,000.
Minimum investment: $5,000 per portfolio with a subsequent $500 minimum deposit amount
The shuttering of robo advisor Smartly in March has created some scepticism in the country surrounding the industry. Competition in the space is intense and it was the reason Smartly could no longer sustain operations.
But if you want the highest degree of safety possible when using a robo advisor, then your best bet is to go with one of the bank-run ones. With a history spanning 85 years and over $30 billion in market capitalisation, UOB is not likely to go out of business any time soon. And out of the bank-run robo advisory services, UOB’s Utrade Robo has the most competitive fee structure – hence its position on this list.
Still, its fees are relatively high compared to other robo advisors, and transparency leaves little to be desired: it does not tell you upfront which ETFs it invests in. That said, this is something that all the bank robo advisors have in common. In short, if you would only feel comfortable with a bank-run robo advisor, go with Utrade Robo.
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Text: Ian Lee/SingSaver