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Autowealth

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About AutoWealth

AutoWealth started in the year 2015 by ex Investment Banker, Ow Tai Zhi and ex Management Consultant, Noel Lee.

Method of investing for AutoWealth

A rule-based investment approach and strategy which places a strong emphasis on diversification across major asset classes, geographical regions, and industries.

Minimum investment and fees for AutoWealth

The minimum investment of AutoWealth is at either S$3,000 flat fee, or 0.5% of total invested + USD18 platform fee per year.

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Investments

Autowealth

Tai Zhi
Tai Zhi, Chief Investment Officer at Autowealth
Level 4. Prodigy
Updated on 07 May 2019
You can use Seedly2019 to enjoy a S$20 top-up when you start and fund an AutoWealth account. How to use the promo code 1. Visit www.autowealth.sg and click “Get Started” 2. Complete the application process & indicate Seedly2019 under the "referrer code" on the last page before submission Terms & Conditions 1. The promotion is only applicable to accounts that are funded within 2 weeks of account activation 2. The S$20 reward is subject to a "claw back" if the participating accounts are closed in less than 3 months 3. You understand that your capital is always at risk when invested

Robo-Advisors

Investments

SeedlyTV EP04

Stashaway

Autowealth

MoneyOwl

Dennis Hoe
Dennis Hoe, Advisory Team Lead at Moneyowl
Level 3. Wonderkid
Answered on 06 Jun 2019
Hi, I’m Dennis Hoe, Advisory Team Lead at MoneyOwl. Thank you for your question. As the other respondents have highlighted below, there is a correlation between return and risk. Risk is often proxied by volatility, though in a sense it is only one aspect of risk. The difference between a low-risk and high-risk portfolio typically lies in the asset allocation between equities and bonds, as equities have higher volatility than bonds. A low-risk portfolio generally has higher allocation into fixed income/bonds. If the bonds are of investment-grade, the returns are generally stable and is less volatile. However, the long-term returns are lower, as compared to investing into equities. A high-risk portfolio typically has more allocation in equities. Historically, equities have always been the driver for returns as stock market goes up in the long term due to growth in global demand. In a study of the US market between July 1926 to December 2017 done by Dimensional Fund Advisors, we see that in any 10-year period, out of 991 overlapping periods, equities beat Treasury bills (short-dated government bonds generally regarded as risk-free) 85% of the time. A well-diversified portfolio of equities is better positioned to gain higher return in the long term but it is more volatile (higher fluctuations). That said, while we all know that equities go up in the long term, it is important to be invested in a portfolio that suits your risk appetite in which you can stay invested comfortably throughout the fluctuations during your investment period. Because the worst thing that you can do is get out too early when the market plunges as a result of not being able to handle the volatility emotionally and miss out on capturing market returns. If so, it might be better for you to have some bonds in your portfolio to dampen volatility but stay invested to reap the long-term return of that asset allocation. To determine which type of portfolio is suitable for you, our advice is structured around these 3 factors: 1) Need to take risk – What are you investing for? Are your current resources enough to meet the goal? The higher your goal relative to your resources, the higher the need for return. 2) Ability to take risk – Your financial situation. Do you already have your emergency funds in place? How long of an investment period do you have to reach your goal? The longer the investment period, the more capacity. For a pure equity portfolio, MoneyOwl recommends 15 years to have a high degree of certainty of having no negative annualised returns, based on historical observations over the long term. If “tail events” are excluded, this 15-year time frame reduces to about 10 years. However, the caveat always is that historical returns are not a guarantee of future returns. 3) Willingness to take risk – What is your likely reaction to the fluctuation of your investment return? Will you sell off your investment when the value drops in event of market downturn? This is your tolerance for short-term losses and fluctuations. At MoneyOwl, we believe that successful investing is not about maximising returns. Rather, we emphasise sufficiency of returns and the reliability of those returns. As mentioned, volatility is only one perspective of risk. From a financial planning standpoint, not being able to meet the return you need to live the life you want, or having your purchasing power eroded by inflation, are also risks. Thus, successful investing for individuals is really about getting the highest probability of getting sufficient returns, with as little guesswork and as little as stress possible, that will meet your goals such as financial independence. Having the right asset allocation for market-based returns, keeping costs low and very importantly, staying invested for the long term are the keys to a successful investing experience. Hope this helps – and if you would like to speak with someone, please feel free to contact us at [email protected](mailto:[email protected]). As we are a Bionic Financial Adviser rather than a pure robo, my team of client advisers will be most happy to have a discussion with you about your risk profile.

MoneyOwl

Stashaway

Autowealth

Smartly

Robo-Advisors

Dividends

Investments

Endowus

Kenneth Lou
Kenneth Lou, Co-founder at Seedly
Level 8. Wizard
Updated on 07 Jun 2019
To answer your first question, yes your dividends are re-invested back into the portfolio. It will go back into your account and it will be whon in the transaction statement monthly. In fact, I think most robo advisors witholding tax will all apply. If you transfer that amount into your Robo-advisor account (it is basically their bank account) the total amount will be managed by them (usually they will keep a small % as cash) but almost 95% or more will be invested based on your risk preference and appetite. Hope this helps!

Robo-Advisors

Investments

Autowealth

Autowealth rebalance to maintain the portfolio allocations. If your allocation is 80stocks/20bonds, and 1 side becomes overweight due to market movements, then it will rebalance back to 80/20. All is done automatically so you dont need to do it. For referral, here is the current promotion: https://www.autowealth.sg/promotions/referral.php You have to enter fullname before submission: THAM YONG ZHI GABRIEL

SeedlyTV EP04

Investments

MoneyOwl

Stashaway

Autowealth

Robo-Advisors

Chuin Ting Weber
Chuin Ting Weber
Level 5. Genius
Updated on 15 May 2019
Hi Anonymous, thanks for your question! Firstly allow me to clarify the structure of an investor's relationship with MoneyOwl vs Dimensional and the roboadvisors you mentioned. An investor would invest in Dimensional funds through or with MoneyOwl ; and the parallel is that an investor would invest in ETFs through roboadvisors like Stashaway or Autowealth. So the "equivalent" of Dimensional funds are the ETFs (provided by Vanguard, State Street etc.) and they are the underlying funds with fund managers. Whereas MoneyOwl's "equivalent" in terms of the relationship with an investor is the roboadvisor like Stashaway or Autowealth. The investment philosophy thus has to be considered on different levels as well. On the underlying fund level, Ting So and Yang Teng have described the differences between Dimensional and ETFs (passive indexed funds traded on exchanges). I would say that there is commonality in both Dimensional funds and ETFs used by roboadvisors in being market-based (largely following market, no "active" management in terms of stock picking or tactical asset allocation/ market timing), low-cost and broadly diversified. To digress slightly - but on an important point: there are structural differences between Dimensional funds, being unit trusts, and ETFs, those used being US ETFs, that affect the accessibility, return and risk of the investor that are not directly to do with markets. Broadly speaking, they are as follows: (1) Dimensional funds, being unit trusts, can be invested even with small amounts down to your last dollar. MoneyOwl, being a social enterprise seeking to bring great solutions to the ordinary person, has a low threshold in terms of investment quantum of $100 one-off/ $50 monthly. To do the same with ETFs, you would have to either have larger investment amounts, accept some drag from keeping some spillover in cash, or fractional shares with your record kept at the roboadvisor's level and you may or may not be comfortable with this. (2) ETFs (depending on which ones are used) may have a lower headline Total Expense Ratio (TER) than Dimensional funds, but the situation may be reversed once you consider hidden costs of ETFs especially withholding tax treatment, but also fund bid-ask spread and forex bid-ask spread. Dimensional funds used by MoneyOwl are domiciled in Ireland, are much more tax-efficient than ETFs, and traded on NAV, without bid-ask spread, and are registered in Singapore as SGD funds. (3) For the bond portion, Dimensional funds are fully hedged back to SGD, your base currency, whereas US bond ETFs are not. It is important to hedge bonds back to base currency because the volatility of currency is higher than that of the volatility of bonds. If you do not hedge out the currency, then actually you are taking more risk that you had meant to by incorporating bonds into your portfolio and you are really investing in a different type of portfolio with a different risk profile. Please read this article for more important on differences in structure https://advice.moneyowl.com.sg/why-unit-trusts-and-not-etf/ To return to investment philosophy: just as important to consider, besides the investment philosophy of the underlying funds, is the investment philosophy of the one "with" or "through" which you invest -- MoneyOwl or the roboadvisors. While the underlying instruments are market-based, or passive or passive-plus, do understand whether there is an active overlay expressed in terms of dynamic or tactical asset allocation, based on such views as macroeconomic changes, market forecasts etc., and which you are convinced by. MoneyOwl believes that it is very hard to beat the market consistently over the long run by changing tactical asset allocations, as borne out in the active managers' longstanding underperformance as a group and also the lack of persistency of champions who make it in on year. Instead, MoneyOwl believes in staying invested in globally diversified portfolios over your investment horizon to capture market return, without going in and out. Rebalancing for us is about returning to the weights that present your intended risk/return mix or asset allocation, based on your need to take risk, your ability to take risk and your willingness to take risk, not about changing asset allocation mixes. A full description of our investment philosophy is here https://advice.moneyowl.com.sg/the-right-way-to-invest/ You may also wish to join us at our inaugural Investment Symposium on 25 May 2019! https://www.eventbrite.sg/e/moneyowl-investment-symposium-registration-60702740531 In addition, you may wish to understand how each of the companies you are investing "through" or "with", adds value as there are meaningful differences. After all, you pay an advisory/"wrap"/access fee. There are many models, some are more like robo-macro fund managers (as they shift asset allocations), some are more robo-tools for access. For MoneyOwl, allow me to describe who we are and what we do: 1. Our core is advisory, and bionic (not just robo-) advisory. Bionic advisory means combining tech and human wisdom, and we have a good-sized (human) advisory team of fully-salaried (non-commissioned) advisoers who are available to you not just for client service, but for actual regulated financial advice. Why do we believe that humans are important in investments? This is because money is a very personal thing and can involve not just the head but the heart. There can be complexities in how the need to take risk, ability to take risk and willingness to take risk interact or contradict each other, and human wisdom for risk coaching is needed. Most importantly, risk coaching is important to help investors understand how markets work and to stay invested through turbulent times, to not lose out on return but capture the full market return upon recovery. In fact, Dimensional funds are not available directly to investors worldwide, but they only distribute through advisers, because they believe in the advisor alpha or value-add to a client's investing experience. 2. We are a comprehensive financial advisor, not just an investment (robo-)advisor, though we have an investment platform, which is our third robo after insurance and will-writing. These are all on our website at www.moneyowl.com.sg In the next few months, we will roll out our fourth robo which is the comprehensive planning module that incorporates CPF LIFE into retirement planning as the starting point or bedrock of retirement planning for Singaporeans and PRs. If you check out our content site at advice.moneyowl.com.sg, you will see that our range of articles is not just about investments, but about insurance, estate planning, wills, CPF etc. 3. Finally, MoneyOwl is not a pure start-up, but a joint venture between NTUC Enterprise and Providend. NTUC is a household name that has been around for decades, to serve ordinary working families and help everyone stretch the hard-earned dollar. Providend is the first fee-only, conflict-free independent financial adviser in Singapore, one of the first set up almost two decades ago, known for its best-in-class expertise and ethical advisory practice. As part of a larger corporate group, we also take security seriously, with MoneyOwl being an ISO27001 certified company despite being only about 9 months old. We are thus confident to bring our services to the Singapore mass market, with this unique parentage that brings a combination of mission and experitse, to be with you in your investment and holistic financial planning journey. Hope this helps and thanks for reading!

SeedlyTV EP04

Robo-Advisors

Investments

Smartly

Autowealth

MoneyOwl

Stashaway

Endowus

Cedric Jamie Soh
Cedric Jamie Soh, Director at Seniorcare.com.sg
Level 4. Prodigy
Answered on 03 Jun 2019
A robo adviser is alway removing human emotions and helping you to diversify in a low-cost way. I don't see the point of diversifying if your capital or monthly amount is small. You should probably lump into one for easy checks. (Do NOT check daily, investment should be long term, check once or twice per year... easier said than done thouhg) Stick to one. Find the best that suits you and stick to it. Any small disadvantages or advantages that crops out later probably is insignificant.

SeedlyTV EP04

Investments

Robo-Advisors

Smartly

Autowealth

Stashaway

MoneyOwl

Endowus

Samuel Rhee
Samuel Rhee, Chief Investment Officer at Endowus
Level 4. Prodigy
Updated on 24 May 2019
Dear Anonymous, This is a great question and Endowus has reviewed the pros and cons of accessing various products and we believe that the most efficient way to access certain asset classes or funds is through a third option - Irish UCITS Funds(Unit trusts). I have seen many comparisons but nobody has really delved into the key issues in detail. Because they normally compare the US ETFs vs Irish UCITS ETFs or UCITS ETFs vs UCITS funds. I will review the pros and cons of the respective fund vehicles below; 1. US ETFs on the surface look good as they have lower fees and have narrow bid-ask spreads but this is more than offset by the huge witholding tax that it is subject to (For example, if dividends are 3% then you will be charged 1% which dwarfs any benefits of lower fees/narrow bid ask spreads). Recouping taxes is notoriously difficult as the money is co-mingled (meaning the dollar invested is not in your name and the tax refund is not specific to you) - you only get partial refund and you have to wait a long time after the money has been deducted to get a refund and God forbid you take your money out from the platform before the refund comes through as you may never get it back. 2. Irish UCITS ETFs simply solves the tax issue but on the other hand you have less choice in terms of ETFs, the bid-ask spread is quite wide as liquidity is poor, and finally the fees are higher as they tend to be smaller in scale and scale vs cost is directly and inversely correlated. However, you can bypass the bid-ask spread issue by accessing them through market makers at a small fee at NAV (this is the actual price/value of the fund = and please remember ETFs are funds as well but they are just listed to provide intraday liquidity and readily tradeable. This is a key point I elaborate on later). 3. UCITS Funds. Apart from the fact that these funds are tax-efficient like the UCITS ETFs, they also have no bid-ask spread. NONE AT ALL. This is because you can buy/sell it at the actual NAV. Even US ETFs have bid-ask spreads and some US ETFs are very wide at times. The whole point of ETFs and the reason they have bid-ask spreads is because it is exchange traded. If we trade US or UCITS ETFs from Singapore then we normally trade only once a day so it defeats the whole purpose of using ETFs which is supposed to provide live intraday liquidity. They trade once a day and provide liquidity once a day. So there is no benefit to ETFs other than the other factors focused on cost, which on balance including tax and FX risk, they lose out on. We are not taking advantage of the most important aspect of why ETFs exist. Furthermore, for UCITS funds, because you are buying at NAV at daily liquidity there is no additional cost of transaction and no need to inefficiently fractionalize shares(llike ETFs) as you can invest to the cent at NAV price. Finally, these funds have a broader choice than UCITS ETFs and they tend to be at scale much cheaper in terms of total costs. There is also another important factor that many people don't discuss as much as taxes, and that is the impact of FX on risk and returns. We pursposefully build and access UCITS funds denominated in SGD or Singapore dollar hedged products in the case of fixed income products. Whereas you are taking FX risk with US or other ETFs, which involves additional costs. This is a big additional benefit to accessing the products through Irish UCITS fund structures. So if you combine all of that, UCITS Funds from the likes of PIMCO and Dimensional that Endowus uses, are in fact the most cost-efficient, tax-efficient vehicles and removes completely any FX risk. Thereby allowing you to invest your Singapore dollar savings as a Singapore based investors with peace of mind. Thank you! Yours Sincerely, Sam

Investments

Robo-Advisors

Autowealth

Stashaway

Smartly

Endowus

MoneyOwl

Tai Zhi
Tai Zhi, Chief Investment Officer at Autowealth
Level 4. Prodigy
Updated on 09 May 2019
Since 2001 when world data was first available. This would have covered many market cycles and crises including the 2001 Dot-Com bubble, 2003 SARS epidemic, 2008 GFC, 2010 Euro Debt Crisis I, 2011 Euro Debt Crisis II, 2015/16 China meltdown. The backtesting is carried out to provide scientific basis for our return & risk projections. That said, we strongly urge you to assess our actual investment returns which are published and updated on our website https://www.autowealth.sg/strategy.php This practice of publishing investment returns is a reflection of our confidence to deliver superior returns and also a reflection of our values to provide transparency. We note that we are the first in the robo-advisory space and the only one to do this.

Stashaway

Endowus

Autowealth

MoneyOwl

Investments

Robo-Advisors

Tai Zhi
Tai Zhi, Chief Investment Officer at Autowealth
Level 4. Prodigy
Updated on 07 Jun 2019
Yes, I certainly agree with Gabriel and Hariz. Let me share with you my observation during the 2008 GFC. During that period I was still in the sovereign wealth fund GIC. Investment professionals were split in opinions on whether a crisis is about to unfold. Even professionals with decades of experience cannot time the market, so I would really suggest individual investors not to fall for the disillusion of timing markets. We are just not as sharp as gurus like George Soros, unfortunately. Secondly, many investment professionals were way pessimistic or conservative way too early. They held high allocations to cash and tend to miss the run-up. When the crisis finally develop, they panic thinking it would be the end of world stock markets ("this time is different" phenomenon) and did not buy into the discount, thereby squandering away a precious market opportunity. Therefore, in conclusion, its more discipline to maintain a consistent risk profile throughout. Astute investors would have always set aside emergency funds. If there are no foreseeable need for the emergency funds, you may utilise part of it to take advantage of market corrections that presents itself from time to time to improve your investment returns. Do replenish the utilised portion when you receive your subsequent months of wages though.

SeedlyTV EP04

Autowealth

Robo-Advisors

Investments

Tai Zhi
Tai Zhi, Chief Investment Officer at Autowealth
Level 4. Prodigy
Answered on 09 May 2019
I will use iShare Core Moderate Allocation ETF (AOM) to illustrate. 1. Selection of portfolio assets AOM holds and uses IUSD, IVV, IDEV, IAGG and IEMG, each of them a Blackrock iShare ETF. AutoWealth for one uses Vanguard ETFs for stocks allocation because we believe Vanguard ETFs represent the best solution for stock allocation (vis-a-vis Blackrock iShares and many other ETF providers). Note also that AOM uses IUSD which is not entirely a government bond ETF (only 33%). At AutoWealth, we believe government bond offers the best protection for you especially in a bad market crisis and we therefore allocate 100% of our bond allocation to government bonds. Therefore from a selection perspective, we are able to build the best portfolio using the best ETFs for you. Whereas iShares obviously uses their own products which may not always be the best in class. 2. Ability to rebalance and manage risk and improve returns AOM portfolio construction for stocks is Developed vs International vs Emerging Markets. This restricts the ability to effectively rebalance against major geographical regions like U.S., Europe, Asia Pacific and Emerging Markets. For example, U.S. and Europe both belong to Developed Markets but the two have a very different market movement from time to time. Europe experienced Euro Debt Crisis and Brexit (independent of U,S.) whist U.S. experienced trade war with China (independent of Europe) and their market movements are divergent from time to time. At AutoWealth, we intelligently hold one ETF each for each of the various geographical regions. This allows us to sell and take profit on particular regions and buy particular regions whilst they are at a discount. Portfolio rebalancing is carried out primarily to maintain a consistent risk profile and manage risk. But the secondary effect is that we take advantage of excessive market volatility to generate extra returns for you. 2. Fee/Cost Perspective AOM expense ratio is 0.25% and its top 5 holdings are IUSD, IVV, IDEV, IAGG and IEMG. Each of these are ETFs with another layer of own fees. So they are not really as cost efficient as you think.
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