Robo War Experiment (RWE) Update – Cost Comparison as of 21 May 2022

This Opinion post first appeared in my blog here: https://pwlcm.wordpress.com/2022/05/21/robo-war-experiment-rwe-update-cost-comparison-as-of-21-may-2022/

Disclaimer: This post is just for educational sharing purposes. Please do your own due diligence on any products mentioned in this post.

Seedly community member @Barrilicious requested a cost comparison on the 5 robo advisor portfolios: https://seedly.sg/posts/my-robo-war-experiment-series-of-opinion-posts?&utm_source=answer_share&utm_medium=internal&pcid=161399

So I decided to insert a post between my monthly performance update to examine the cost of the 5 robo advisor portfolios. Here is the cost comparison table as of 21 May 2022:

The fees consist of 2 parts, one from the underlying invested funds (fund level fees) and the other from the robo advisors. Both Endowus and MoneyOwl are investing using unit trusts, whereas Syfe, StashAway and SquirrelSave are using ETFs. The following sections would cover the cost structure of the 5 robo advisors.

Endowus Equity 100 Portfolio

Endowus portfolio consists of 4 unit trusts, 3 of which are Dimensional unit trusts, with different fund level fees (Total Expense Ratio, TER). Endowus would credit the trailer fees rebates quarterly, hence reducing the net fund level fees. We derive the net fund level fees by calculating the sum of the product of allocation and net fees, and then add the access fees of 0.6% to get the total fees.

The overall cost structure is tabulated in the following image:

MoneyOwl Equity 100 Portfolio

MoneyOwl portfolio consists of 2 Dimensional unit trusts, one for Global Core Equity and the other for Emerging Markets Large Cap. There is no trailer fees for Dimensional funds.

See the following image for the cost structure:

Syfe Equity 100 Portfolio

Syfe portfolio invests in many ETFs, of which the composition and allocation would change over time. Interestingly, they have MCHI and KWEB in the portfolio, both are investing in China equities.

The following cost structure is based on current composition and allocation:

StashAway SRI 36% Portfolio

Similar to Syfe, StashAway portfolio also consists of many ETFs across a few asset classes, namely equity, real estate, commodity (gold specifically) and bond. Do take note that there is no KWEB in current composition as StashAway had re-optimized their portfolio to remove the exposure to China equities in March 2022 (refer to Robo War Experiment (RWE) Update – March 2022).

Here is the current cost structure:

SquirrelSave Very Aggressive Portfolio

Finally, SquirrelSave portfolio also consists of many ETFs, similar composition (equity, real estate, commodity and bond), but different allocation. They are pretty heavy on QQQ and SPY, taking up almost 75% in US equities.

SquirrelSave has an additional fee known as the performance fee in their cost structure, which is calculated based on 10% of positive return above the High Water Mark. In order to estimate the performance fee, I referred to SquirrelSave blog post “How SquirrelSave AI Risk-Managed Portfolios Performed Over Time” published on 1 April 2022, in which they show 12 actual client Very Aggressive portfolios. I calculate the average return of the 12 portfolios was 9.83% p.a., 10% of which means 0.98% performance fee based on capital, and 0.90% based on portfolio value (i.e. 109.83% of capital).

Detailed cost structure as show below:

Key Observations

1. All ETF-based portfolios have lower fund level fees.
2. MoneyOwl Dimensional-based portfolio has comparable fund level fees as ETF-based.
3. Endowus mostly-Dimensional-based portfolio has slightly higher fund level fees after netting off trailer fees rebates.
4. Endowus and MoneyOwl are the lowest in terms of robo advisor fees, with Syfe following closely behind.
5. SquirrelSave robo advisor fees is the highest due to the additional performance fees.
6. In terms of total fees, the cost winners are MoneyOwl and Syfe, followed by Endowus.

7. Cost is just one aspect of evaluating the robo advisor portfolio. What is more important would be the investment strategy, and the net return it can achieve subject to the risk incurred.

Referral Links/Codes

Endowus: https://endowus.com/invite?code=J6YV3
Syfe: SRPTRJTFQ
StashAway: https://www.stashaway.sg/referrals/choonght43
MoneyOwl: https://moneyowl.com.sg/app/accounts/sign-up?referral_code=5FZY-58AG
SquirrelSave: https://app.squirrelsave.com.sg/Start/Referralcode?referralid=2996