Singapore markets close in 6 hours 29 minutes
  • Straits Times Index

    2,987.16
    +13.29 (+0.45%)
     
  • Nikkei

    29,419.68
    +11.51 (+0.04%)
     
  • Hang Seng

    29,455.49
    +359.63 (+1.24%)
     
  • FTSE 100

    6,613.75
    +25.22 (+0.38%)
     
  • BTC-USD

    48,718.68
    -380.55 (-0.78%)
     
  • CMC Crypto 200

    976.35
    -10.30 (-1.04%)
     
  • S&P 500

    3,870.29
    -31.53 (-0.81%)
     
  • Dow

    31,391.52
    -143.99 (-0.46%)
     
  • Nasdaq

    13,358.79
    -230.04 (-1.69%)
     
  • Gold

    1,731.60
    -2.00 (-0.12%)
     
  • Crude Oil

    59.86
    +0.11 (+0.18%)
     
  • 10-Yr Bond

    1.4150
    -0.0310 (-2.14%)
     
  • FTSE Bursa Malaysia

    1,570.86
    +0.99 (+0.06%)
     
  • Jakarta Composite Index

    6,347.73
    -11.48 (-0.18%)
     
  • PSE Index

    6,901.14
    -18.40 (-0.27%)
     

Robo Advisors Singapore: Complete 2021 Guide

SingSaver team
·10-min read

Heard the term “robo advisor” and wondered what it’s all about?

Robo advisors are a fast-emerging type of investment service which helps you manage your portfolio while saving time and money. They’re especially popular among millennials because they’re easy to use, charge very low advisory fees, and minimum investment amounts can start as low as $50.

Learn how they work, the costs, the benefits, and the disadvantages of the various robo advisors available in Singapore.

  1. What is a robo advisor?

  2. How do robo advisors work?

  3. What kind of investments can I make with robo advisors?

  4. Are robo advisors regulated by Monetary Authority of Singapore (MAS)?

  5. What are the alternatives to robo advisors?

  6. What are the pros of investing with robo advisors?

  7. What are the cons of investing with robo advisors?

  8. Who are robo advisors best for?

  9. What robo advisors are available to Singapore investors?

  10. How much do robo advisors cost, including fees and taxes?

How do robo advisors work?

What is a robo advisor?

Robo advisors are digital advisory investment services driven by an algorithm. Services include the automated maintenance and handling of your personal investment portfolio, based on their understanding of your financial goals and risk appetite. The main benefits of using a robo advisor are:

  • a small management fee of between 0.5% to 1%

  • minimum investment as low as $100

  • easy monitoring of your portfolio through mobile app

How do robo advisors work?

After signing up for an account with a robo advisor, you will be required to complete an online questionnaire and enter personal information, your risk tolerance and financial situation, as well as your financial goals. You will also be required to deposit money into your account, which will be used to invest.

Upon making an assessment of your investment goals and preferences, a robo advisor’s algorithm will then automatically invest your money through selected portfolios which suits your investing profile. A robo advisor basically replaces the human element in investing and managing your portfolio, which is why they charge much cheaper management fees.

Complete Guide to Robo Advisors | SingSaver
Source: StashAway

What kind of investments can I make with robo advisors?

Robo advisors commonly invest in bonds, commodities, ETFs (exchange traded funds), stocks and precious metals from developed (for example, U.S, Europe and Japan) as well as emerging markets. Before signing up with a robo advisor, check out the investible assets under their portfolio to get a sense of the breadth and scope of their investment exposure.

Are robo advisors regulated by Monetary Authority of Singapore (MAS)?

Yes, they are regulated by the MAS. Robo advisors are required to be licenced under the Securities and Futures Act (SFA) and/or Financial Advisers Act (FAA).

However, as robo advisor platforms are a new and developing sub-set of the fintech industry, MAS is keen not to stifle digital innovation with lots of red tape.

Robo advisors can be licensed under the SFA even if they lack the usual corporate track record requirements, as long as they have board or senior management members with relevant experience in fund management and technology, offer only non-complex collective investment schemes and submit to an independent audit after the first year.

They can also be licensed under the FAA as long as they are able to gather customer data and assess their customers’ risk profile to prevent recommending the wrong types of investments.

What are the alternatives to robo advisors?

Other ways to invest are through traditional brokerage firms, financial advisors/experts, and private wealth management firms. However, such alternatives are a lot more expensive than robo advisors. That’s why acquiring investment knowledge and skills yourself will always be the cheapest option.

Pros and Cons of investing with robo advisors

What are the pros of investing with robo advisors?

Easy to use: Robo advisors don’t only compete in terms of investment returns and service fees, but also how easy their platform is to use. Most robo advisors have mobile apps or mobile web versions that boast a clean and simple user interface that can be easily understood by both beginners and advanced investors. This makes for easy, on-demand monitoring of your investment returns and portfolio.

High-class portfolios, low fees: Advisory fees of robo advisors in Singapore range between 0.5% to 1% per annum, which is roughly a third of what established traditional financial advisors charge. Not only that, you have a wide selection of mutual funds, bonds and ETFs to choose from that are usually only available to private wealth funds or global asset managers who manage billions of dollars.

Low minimum investment: With robo advisors, the minimum investment amount can be as low as S$50. With traditional financial advisors and to access global investment instruments, the usual minimum investment amount can be as high S$100,000.

No lock-in fee or period: Most local robo advisors don’t have lock-in fees/periods or early withdrawal penalties, which means you can cash out your investments at any time.

Diversified portfolio: A robo advisor will invest your money in a basket of assets, which helps to diversify your portfolio. That helps to reduce risk since you won’t be putting all your eggs in one basket, so to speak. Your risk will be evenly spread out so that even if the value of one or two of your stocks goes down, the overall value of your total portfolio will be counter-balanced by assets that have risen in value.

What are the cons of investing with robo advisors?

You still have to keep an eye on your portfolio: Robo advisors aren’t holistic financial planners and they haven’t gotten to know you personally, unlike a proper financial wealth planner. They don’t know your life circumstances, for example, your plans to raise or grow a family or your career aspirations to name a few. While robo advisors can optimise your returns based on specific goals, they can’t view your entire portfolio holistically, or can’t offer personal human advice when markets go up and down. That means you’ll have to still keep a close eye on monitoring your portfolio since only you have a bird’s eye view of your investment goals.

Relatively untested: As most robo advisors in Singapore only launched in the last 3 to 4 years, the automated investment algorithms haven’t been really tested yet in a severe market downturn yet. The COVID-19 pandemic and resulting recession will be their first litmus test.

Robots are impersonal: Investing isn’t always based entirely based on data and trends. Robo advisors can’t address the nature of human emotions or can’t give nuanced personal advice during market upturns or downturns. If you want to be able to invest in your own stocks or securities or very specific investment preferences (for example, you don’t wish to invest in trade in alcohol, trade, tobacco or only want to invest in socially conscious or “green” companies), robo advisors may not be able to give you that flexibility or degree of customisation.

Who are robo advisors best for?

Robo Advisors are best for people who are keen to invest small sums of money, but aren’t that interested in knowing the ins and outs of Do-It-Yourself (DIY) investing. Basically, robo advisors are for people who don’t have the time or patience to monitor and study global stock market trends. DIY investing requires self-study and market experience before you become really good at managing your overall financial portfolio.

Go further on your investing journey with some help

Not everyone who takes on a personal loan because of bad money management or debt, more often than not, many do so to invest. If you’ve been investing wisely and understand the market, a personal loan with low interest rates can help you reap higher returns and achieve your financial goals earlier.

Compare Personal Loans

How to pick the best robo advisor in Singapore

What robo advisors are available to Singapore investors?

Robo Advisor

Launch Date

Investible Assets

Endowus

2017

6+ Global asset managers, emerging market bonds.

MoneyOwl (by NTUC)

2018

5 portfolios in developed and emerging market equities, bonds

Smartly

2015

20+ ETFs in equities, government and corporate bonds, commodities, real estate and cash

AutoWealth

2015

8,000+ stocks and 600+ government bonds from US, Europe, APAC and emerging markets

OCBC RoboInvest

2018

28+ ETFs within markets in Singapore, Australia, Britain, U.S., Europe and Hong Kong

StashAway

2016

19+ ETFs ranging from small-cap growth, consumer staples, technology, precious metals, U.S. real estate and govt bonds, and developed and emerging market equities

Kristal.AI

2016

70+ ETFs in consumer, diversified, energy, financials, government, healthcare, industrials, real estate and technology

Philiip SMART Portfolio

2017

ETFs, unit trusts, closed-end funds, investment trusts, business trusts, exchange-traded notes

UTrade Robo

2018

Equities, fixed income and equities
Sub of UOB Kay Hian

DBS digiPortfolio

2019

Best funds selected from DBS’ platform: Fixed income (bonds) and equities. Asia portfolio (SGD): SG listed ETFs, EIP. Global portfolio (USD): UK listed ETFs and SIP

Squirrelsave

DAAS (digital asset allocation system) selects ETFs that cover developed and emerging equities, fixed income, commodities and currencies

Compare Best Robo-Advisors

How much do robo advisors cost, including fees and taxes?

Some robo investors charge a platform fee of S$18 p.a such as MoneyOwl and AutoWealth, but transaction fees (withdrawals and deposits) are normally free of charge.

Aside from the usual foreign exchange fees, fund expense ratio will range from 0.3% to 0.16% p.a. Here’s a summary of robo advisory fees in Singapore.

Robo advisors that charge fixed rates

Robo Advisor

% of total value of your investments per annum

MoneyOwl

0.5%

AutoWealth

0.5%

OCBC RoboInvest

0.88%

Phillip SMART Portfolio

0.5%

DBS digiPortfolio

0.75%

Squirrelsave

Management fee 0.5% + Performance Fee 10% of any positive return

Robo advisor fees for investments under S$100,000

Robo Advisor

Amount

Advisory Fee p.a

Endowus

Up to S$200,000

0.6%

Smartly

Under $10,000

1%

Smartly

Above $10,000

0.7%

StashAway

First S$25,000

0.8%

StashAway

S$25,000 to S$50,000

0.7%

StashAway

S$50,000 to S$100,000

0.6%

Kristal.AI

First S$50,000

Free

Kristal.AI

Above $50,000

0.3%

UTrade Robo

Under S$50,000

0.88%

UTrade Robo

S$50,000 to S$100,000

0.68%

Robo advisor fees for investments between S$100,000 – S$500,000

Robo Advisor

Amount

Advisory Fee p.a

Endowus

Up to S$200,000

0.6%

Endowus

S$200,001 to S$1,000,000

0.5%

Smartly

Above $100,000

0.5%

StashAway

S$100,000 to S$250,000

0.5%

StashAway

S$250,000 to S$500,000

0.4%

UTrade Robo

Over S$100,000

0.5%

Robo advisor fees for investments between S$500,000 – S$1M

Robo Advisor

Amount

Advisory Fee p.a

Endowus

S$200,001 to S$1,000,000

0.5%

StashAway

S$500,000 to S$1,000,000

0.3%

Robo advisor fees for investment amounts above S$1M


Robo Advisor

Amount

Advisory Fee p.a

Endowus

S$1,000,001 to S$5,000,000

0.35%

Endowus

S$5,000,001 and above

0.25%

StashAway

above S$1,000,000

0.2%

Compare Best Robo-Advisors

Conclusion

Robo advisors are a cheap and easy entry point to the world of investing. Ultimately, your choice of robo advisor should be based on the ease of use of their platform, their range of investible assets, service fees and recent investment track record/results.

SingSaver’s exclusive offer: Enjoy waiver of management fees on up to the first $40,000 invested in the first 6 months, subject to a minimum investment amount of $10,000.

Apply Now

Help yourself to better financial shape in the new norm, with SingSaver’s all-new Ultimate Savings Guide! Got your free copy yet?

Check Out SingSaver’s Ultimate Savings Guide

Read these next:
5 Steps to Reaching Your Financial Goals
Do You Have A Passive Income Strategy?
Singapore Savings Bonds: Interest Rates and How to Buy?
Best Personal Loans In Singapore With The Lowest Interest Rates (2020)
5 Ways To Get The Highest Credit Score In Singapore

The post Robo Advisors Singapore: Complete 2021 Guide appeared first on SingSaver Blog - We Compare, You Save.