06 May 2021
Plan to use robo-advisors long term. 1+ year with StashAway now, but with other options, looks like SA has the highest fees which will eat into my returns long term. Why stick with SA? Should I move?
StashAway is the only robo-advisor to use stacked fee structure, instead of tiered. Even though the more you invest with them, the lower fees will become - but this article and analysis by Dollars and Sense shows that even with a large AUM, SA is still higher than others like Endowus, Syfe and AutoWealth.
It's true that SA has relatively higher fees. So the questions you need to ask yourself are:
Do you believe in SA's investment philosophy? At the end of the day, this is the driver of returns, and it's what you're paying them for. If you don't believe in it, there's really no point sticking with them. If you do, and think that there is reason for SA to be charging the fees they charge,
Are the returns showing it? The key here is not to look at the absolute performance of SA's portfolios, but the relative performance as compared to similar risk portfolios from other Robos. Given that SA's fees are higher, they would need to outperform other Robos by an amount equal to or more than the difference in fees in order to justify sticking with them. Of course, past performance isn't an indicator of future performance, but you need some form of proof that SA's philosophy works better than other Robos' philosophies, and this is probably the only available evidence.
Personally, I try to do what's within my control in order to maximise returns. Since I can't control the market and thereby control gross returns, I can only control net returns by minimising my fees paid. This means going with the lowest cost option whenever possible when deciding between 2 reasonably similar investments. So if I were you, I'd probably make the switch.
At the end of the day, you also need to understand the differences in portfolios between SA and the other Robos if you intend to switch. They will be slightly different and thereby entail different risks, so be sure to educate yourself accordingly!
Hope this helps and all the best!
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