Is StashAway and Syfe truly passive investing? What's passive about it when the portfolios actually seem to be actively managed?

Hi Anon,

Thanks for the great question! You made a great point, there can be active management of investment exposure by robo-advisors, even though they are using passive instruments such as an index-tracking ETFs.

On Portfolio allocation strategy:

For Endowus, we believe in having a passive portfolio allocation strategy, even though the underlying funds can be actively managed (Dimensional and PIMCO funds). This way, the returns you are getting will be based on the

1. The diversified broad-based exposure of fixed equities: bond portfolio mix we advised you to take

2. Proven track records of reputable fund managers

3. Minimised tax inefficiencies through UCITS funds

The financial markets are fickle, and we want to invest in a consistent manner so that our clients can stay invested for long term gains, rather than be worried about our capability to actively trade on asset allocation.

On Active vs Passive(index) Funds:

We believe that it is impossible to "pay" for performance and that betting big on single companies/countries, be it for bonds or equities, is the not right way to invest long term. We choose our funds based on cost and diversification first and foremost.

You can read more about active bond management strategy here:

https://sg.endow.us/3l1M3zn​​​

Hello, thanks for reaching out! The building blocks of Syfe's portfolios are passively managed ETFs the likes of QQQ, SPY and more. Your funds are invested in these underlying ETFs which aim to track a specific index. As such, the ETFs themselves are passively managed as compared to unit trusts where an active manager may buy and sell frequently in an attempt to beat the market.

Do note that each Syfe portfolio has a specific investment objective. An investor who wants to cushion his portfolio from large losses in a downturn will choose Syfe's Global ARI portfolio for our risk management algorithm. The portfolio is still comprised of passive ETFs, but our ARI algorithm will work to keep portfolio risk in line with the investor's risk appetite.

For such needs, a fully passive portfolio allocation strategy may not be adequate. (A passive approach that never adapts to market conditions is forced to take the brunt of a drawdown.)

Ultimately, it depends on the investor's own preferences and objectives, as well as what sort of portfolio management they expect / seek. ​​​