Is there a point to diversifying between different robos? - Seedly
 

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Asked by Anonymous

Asked on 03 Dec 2019

Is there a point to diversifying between different robos?

I have 9k and was thinking of putting 3k each into stashaway, autowealth and kristal ai. I thought 3k as that was the minimum for autowealth and I wanted to use the same amount for better tracking as to which does better. Or, would it be better tor rather put all 9k into one robo directly?

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There's no real reason to diversify in this fashion since the robos are already diversified, and since their investment strategies are not alike, its also not fair to dump in 3K each and do a comparison. Instead, decide if Robo is something suitable for you in the first place, and then find the Robo service that you prefer.

But key point to note is that you must be prepared to go in for at least 3 years or more. And in the short term, you can expect to see losses due to volatility. Just because you handed your investments over to a Robo does not guarantee you'll make money.

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Junus Eu
Junus Eu
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Top Contributor (Jan)

Level 9. God of Wisdom
Answered on 04 Dec 2019

Not really unless you just want to take advantage of the promos. Otherwise, a single robo should be able to provide enough diversification.

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Bjorn Ng
Bjorn Ng
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Top Contributor (Jan)

Level 9. God of Wisdom
Answered on 04 Dec 2019

Hello there! I don't/haven't use any robo-advisors yet, though I've done some reading on it.. But generally speaking, I think there is no need to diversify between different robos, because each robo are already diversified according to your risk preference. Having 3 robos is like.. duplicating your 3 basket of eggs, if that makes any sense!

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Choon Yuan Chan
Choon Yuan Chan
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Top Contributor (Jan)

Level 9. God of Wisdom
Updated on 04 Dec 2019

Don't think there is a need to diversify across all 3, one is good enough. It is true there is a platform risk, but i feel this risk is small enough

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Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered on 04 Dec 2019

The only reason if you want to spread your eggs across 3 robo-advisors is to diversify your investment platform risk. The risk that Stashaway,autowealth or kristal might go bust.

If not, your total fixed overheads across 3 platforms will be a tad high to justify bss on a mere $3k contribution/plateform

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Sanchit
Sanchit
Level 6. Master
Answered on 04 Dec 2019

I do believe its a wise decision to diversify in multiple robo-advisors. I do believe everyone has different algorithms and their returns can be different.

HOWEVER, my single reason to diversify is: Robo-investing is a new concept (esp in Singapore) and you dont know how long the companies would be surviving for. Hence, incase some of these companies merge/ are aquired/ go bust, you atleast dont put all your eggs in one basket and have a valid alternative to go for.

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Hello! Robo advisors are a great innovation for investors. They provide diversified investment options at low cost and great convenience. Of the 3 robo advisors you mentioned, I only know the general investment framework of 2 of them, namely, Stashaway and Autowealth.

Both of them invest differently, but their frameworks appear sensible to me. Stashaway uses the ERAA (economic regime asset allocation) framework that I believe is somewhat similar to what Bridgewater, one of the world's largest fund management companies, is using to build portfolios. Autowealth's framework is to recommend a certain allocation between highly diversified stock ETFs and bond ETFs, depending on your risk profile.

There are many roads to Rome in investing. Stashaway and Autowealth's approaches, as I said earlier, are different, but I do think both are sensible. Which is better? That's really hard to say.

So, it may be worth it to try out all 3 of the robos you mentioned and compare which has the better user experience and better returns (over a sufficiently long period of at least 3 years). This is just my 2 cents!

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