Dear JianHao,
Allow me to answer your second question first. If you are able to successfully execute a globally diversified investment strategy appropriate to your risk profile and stay invested through the ups and downs, and you are investing in global equities and can do your own rebalancing and risk coaching, and cost is your only concern – then indeed you would be probably better off doing DIYinvestments through a low-cost brokerage into global equity ETFs. You would not need MoneyOwl or any roboadvisor or human advisor. Just take note though, that for small investors accumulating small amounts, there may be additional challenges in DIY-ing a Regular Savings Plan, like brokerage charges, FX spreads and the whole emotional management and discipline involved. During this time up to the end of 2021, MoneyOwl is waiving all advisory fees for small investors up to $10,000 so you only have the Total Expense Ratio of average 0.30% p.a. built into the NAV of the funds to pay. There are also some downsides to ETFs in terms of “hidden” charges like withholding taxes etc. For bonds, ETFs are difficult because of the currency risk. Take a read of this article on unit trusts (or mutual funds, like the ones in MoneyOwl’s portfolio) vs ETFs. https://www.moneyowl.com.sg/articles/why-unit-t...
As for investment philosophy, thanks for asking about this because understanding the philosophy of the company you entrust your money to is very, very important. There are indeed meaningful differences among roboadvisers and between roboadvisers’ and MoneyOwl’s investing philosophy.
MoneyOwl believes very strongly in trusting markets and thus adopt a market-based philosophy. We believe in being market-based for both equities and bonds. (There is another question in this AMA on bonds.) We do not try to outguess markets by either picking individual stocks, sectors or countries and definitely not by timing the market (“active management”). Instead, we believe in global diversification across thousands of stocks; and staying invested in the long term. We also do not shift between asset classes based on a “macro view” of the economy as this is essentially active market timing euphemised and seldom works well.
Indeed, there are many roboadvisers today in Singapore using “market-based” or passive instruments such as ETFs. However, I want to caution that just because “index-following ETFs” are used does not mean there is no active management.
**
(1) An ETF may represent only a certain sector or country, not the whole broad market. When a portfolio is assembled with a overweights in some themes represented by a sector or country, that is an active selection in itself.
(2) When a manager assesses the economy or market dynamics and shifts allocation between a portfolio of many ETFs or funds, or shifts between portfolios to “de-risk” or “re-risk”, that is tactical asset allocation.**
The fundamental reason why MoneyOwl adopts a market-based investing philosophy has to do with our DNA as a comprehensive adviser at core. Investment serves the purpose of an overall financial plan, and a financial plan serves to helps us achieve life goals. We do not chase or maximise returns or even risk-adjusted returns. Rather, we emphasise the (1) sufficiency and (2) reliability of these returns. In this regard, it is not that tactical asset allocation cannot give you superior returns to a market return. It could! But it cannot do so consistently and we see from report cards that most active managers do not manage to beat the market.
This focus on reliability and trusted advice at core is also reflected in some of MoneyOwl’s core differences beyond investing philosophy:
(a) Being an NTUC social enterprise and a Providend associate company. We are confident to bring our services to our clients not just because we believe we have the right investment philosophy and process to deliver results to our clients, we have the right people and resources behind the technology. In many ways, MoneyOwl is not a “pure start up” funded by VCs or founders who may be focussed on exit. We are a JV between NTUC Enterprise and Providend. We have been around for decades. NTUC in particular is a trusted household Singapore brand for ordinary working people. Providend has championed conflict-free advice for the last two decades and has deep expertise and experience in comprehensive financial and investment planning. We are definitely committed to the well-being of fellow Singaporeans.
(b) A bionic adviser (i.e., with human advisers): We have a team of trained client advisers to discuss need, ability and willingness to take risks, trade-offs and special circumstances, and understand Dimensional funds and the Nobel prize-winning underlying them, if you want to do so. Some people have observed that many “roboadvisors” are more robo-enabled portfolio tools. We have a robo platform, but our core is advice, including human wisdom.
(c) A comprehensive adviser: We are not just an investment advisory. Investment is only part of your comprehensive financial plan and should be viewed as such. Our comprehensive financial advisory service integrates CPF planning, together with investments in a holistic and sensible accumulation plan for retirement.
Thanks for reading and hope it helps!
Dear JianHao,
Allow me to answer your second question first. If you are able to successfully execute a globally diversified investment strategy appropriate to your risk profile and stay invested through the ups and downs, and you are investing in global equities and can do your own rebalancing and risk coaching, and cost is your only concern – then indeed you would be probably better off doing DIYinvestments through a low-cost brokerage into global equity ETFs. You would not need MoneyOwl or any roboadvisor or human advisor. Just take note though, that for small investors accumulating small amounts, there may be additional challenges in DIY-ing a Regular Savings Plan, like brokerage charges, FX spreads and the whole emotional management and discipline involved. During this time up to the end of 2021, MoneyOwl is waiving all advisory fees for small investors up to $10,000 so you only have the Total Expense Ratio of average 0.30% p.a. built into the NAV of the funds to pay. There are also some downsides to ETFs in terms of “hidden” charges like withholding taxes etc. For bonds, ETFs are difficult because of the currency risk. Take a read of this article on unit trusts (or mutual funds, like the ones in MoneyOwl’s portfolio) vs ETFs. https://www.moneyowl.com.sg/articles/why-unit-t...
As for investment philosophy, thanks for asking about this because understanding the philosophy of the company you entrust your money to is very, very important. There are indeed meaningful differences among roboadvisers and between roboadvisers’ and MoneyOwl’s investing philosophy.
MoneyOwl believes very strongly in trusting markets and thus adopt a market-based philosophy. We believe in being market-based for both equities and bonds. (There is another question in this AMA on bonds.) We do not try to outguess markets by either picking individual stocks, sectors or countries and definitely not by timing the market (“active management”). Instead, we believe in global diversification across thousands of stocks; and staying invested in the long term. We also do not shift between asset classes based on a “macro view” of the economy as this is essentially active market timing euphemised and seldom works well.
Indeed, there are many roboadvisers today in Singapore using “market-based” or passive instruments such as ETFs. However, I want to caution that just because “index-following ETFs” are used does not mean there is no active management.
**
(1) An ETF may represent only a certain sector or country, not the whole broad market. When a portfolio is assembled with a overweights in some themes represented by a sector or country, that is an active selection in itself.
(2) When a manager assesses the economy or market dynamics and shifts allocation between a portfolio of many ETFs or funds, or shifts between portfolios to “de-risk” or “re-risk”, that is tactical asset allocation.**
The fundamental reason why MoneyOwl adopts a market-based investing philosophy has to do with our DNA as a comprehensive adviser at core. Investment serves the purpose of an overall financial plan, and a financial plan serves to helps us achieve life goals. We do not chase or maximise returns or even risk-adjusted returns. Rather, we emphasise the (1) sufficiency and (2) reliability of these returns. In this regard, it is not that tactical asset allocation cannot give you superior returns to a market return. It could! But it cannot do so consistently and we see from report cards that most active managers do not manage to beat the market.
This focus on reliability and trusted advice at core is also reflected in some of MoneyOwl’s core differences beyond investing philosophy:
(a) Being an NTUC social enterprise and a Providend associate company. We are confident to bring our services to our clients not just because we believe we have the right investment philosophy and process to deliver results to our clients, we have the right people and resources behind the technology. In many ways, MoneyOwl is not a “pure start up” funded by VCs or founders who may be focussed on exit. We are a JV between NTUC Enterprise and Providend. We have been around for decades. NTUC in particular is a trusted household Singapore brand for ordinary working people. Providend has championed conflict-free advice for the last two decades and has deep expertise and experience in comprehensive financial and investment planning. We are definitely committed to the well-being of fellow Singaporeans.
(b) A bionic adviser (i.e., with human advisers): We have a team of trained client advisers to discuss need, ability and willingness to take risks, trade-offs and special circumstances, and understand Dimensional funds and the Nobel prize-winning underlying them, if you want to do so. Some people have observed that many “roboadvisors” are more robo-enabled portfolio tools. We have a robo platform, but our core is advice, including human wisdom.
(c) A comprehensive adviser: We are not just an investment advisory. Investment is only part of your comprehensive financial plan and should be viewed as such. Our comprehensive financial advisory service integrates CPF planning, together with investments in a holistic and sensible accumulation plan for retirement.
Thanks for reading and hope it helps!