Robo-Advisors

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Robo-Advisors
  • Asked by Anonymous

    Samuel Rhee
    Samuel Rhee, Chief Investment Officer at Endowus
    Level 4. Prodigy
    Updated 8h ago
    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
  • Asked by Anonymous

    Christopher Tan
    Christopher Tan, Executive Director at MoneyOwl Private limited
    Level 6. Master
    Answered 13h ago
    Dear Anonymous and John Thank you for the question. Just to clarify on what Samuel from Endowus have shared regarding the use of 2 equity funds that MoneyOwl uses versus the 1 fund that Endowus uses. The 2 funds MoneyOwl uses (the Global Core Equity Fund and the EM Large Cap Core Equity Fund) has a combined total expense ratio (TER) of 0.37-0.38%, as compared to the 0.43% of the World Equity Fund used by Endowus. Also, the 2 funds that MoneyOwl uses track the MSCI World and the MSCI EM respectively, and are a cost effective way of getting diversified equity exposure. Our 88%12% Global/EM split reflects the MSCI All Country World Index, which is typically used to represent World Equity exposure. This is not to say that the DFA World Equity Fund used by Endowus is of lesser quality than the one that MoneyOwl uses. We believe that all 3 funds can give investors a good investment experience at a cost that is efficient. We just wanted to clarify that it is not true that the World Equity Fund used by Endowus relative to the 2 funds MoneyOwl uses is the most cost effective way in implementation from Dimensional. At the end of the day, it is how each company wants to execute the asset allocation for their clients in the best way where they think it will give them the best investment outcome after taking cost into consideration. In this regard, both Endowus and MoneyOwl use funds that are considerably lower than what is offered elsewhere. With regard to Fixed Income, MoneyOwl’s philosophy is that the fixed income portion of the portfolio is used for diversification across asset classes and for its negative correlation to equities, effectively acting as a buffer to the equity component in a portfolio during times of volatility. As such, we focus on high investment grade (A and above) bonds that are stable and are fully hedged to SGD so that the returns are not eroded by unfavourable currency movements. The fund has a TER of 0.29% and does not have emerging market bond exposure, but instead has a well-diversified portfolio of about 180 issues (bonds) across 16 countries that make up a large part of the global bond market. It is designed to be part of a total return portfolio to capture and improve expected returns from both yields and capital gains based on information readily observable in bond prices today, without having to forecast what may happen to yield curves around the world in the future. Our goal is for fixed income to provide a high level of portfolio stability during times of market stress to allow our clients to remain invested in their portfolios to capture long term equity returns. In addition, I would like to clarify that iFAST does not own Providend contrary to what was mentioned by Samuel from Endowus. While it is true that iFAST is a corporate shareholder of Providend, Providend is majority owned by individual shareholders and most of them are employee shareholders of which I am the biggest individual shareholder of Providend. And although iFAST is a corporate shareholder of Providend we are not obliged to use them. Our corporate governance would not allow that. In fact, we had relationship with Navigator and also currently have a relationship with another platform, FAME by Philip Securities. We are also free to use other platforms such as Havenport, Saxo and the like. Some of these platforms have approached us and we have also approached some of them before. But having spend the last 2 decades working with various platforms, and having managed end consumers' money through various crises especially the GFC in 2008, we have come to realise that besides cost, factors such as quality of platform, especially in terms of client service, accuracy in reporting and experience serving large number of advisory clients are very important, especially when markets become difficult. While we try to keep cost efficient. We are mindful that we need to balance it with having a safe, secure and experienced platform/custodian as that is the place where we "store" our clients' hard earned money. As MoneyOwl's asset under management becomes bigger, we will always try to bring this custodian and platform cost down for our clients. In my personal opinion, both MoneyOwl and Endowus are good companies that investors can trust. Both companies serve clients with different needs and preferences. Both companies try to be as cost efficient as possible for our clients and to do the right thing. Ultimately, investors should decide who to use to build wealth based on which company can better serve their needs. I would be happy if Singaporeans use either Endowus or MoneyOwl to build their wealth. I think their money is in good hands.
  • Asked by Anonymous

    Chuin Ting Weber
    Chuin Ting Weber
    Level 5. Genius
    Answered 2w ago
    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!
  • Asked by Anonymous

    Jaren Ng Kok Liang
    Jaren Ng Kok Liang
    Level 2. Rookie
    Answered on 15 Apr 2019
    Have you started investing with StashAway yet? Sign up with my link and we'll both get up to $10,000 SGD managed for free for 6 months! https://www.stashaway.sg/referrals/jarenn8w
  • Asked by Sharon Lee

  • Asked by Anonymous

    Gabriel Tham
    Gabriel Tham, Kenichi Tag Team Member at Tag Team
    Top Contributor

    Top Contributor (Apr)

    Level 8. Wizard
    Answered 3w ago
    I would suggest to stick with your risk allocation level. You got the risk profile based on the questionaire, and I assume you did not set it to balanced yourself. So, if you want to adjust the risk higher, you have to do your own risk assessment because higher risk could mean higher drawdowns too.
  • Asked by Anonymous

    Christopher Tan
    Christopher Tan, Executive Director at MoneyOwl Private limited
    Level 6. Master
    Answered 3w ago
    Dear Anonymous Thank you for your question. Please allow me to answer it from MoneyOwl's perspective. All investors' money are protected and held in trust's account under our custodian’s iFAST Financial Pte Ltd - Client Trust, which are subjected to MAS regulations. Even in the unlikely event that MoneyOwl closes down, your money is safe with the custodian. Taking it a step further, if in the unlikely event that iFAST ceases operations, your investment holdings held under custody with iFAST will not be affected as they will either be returned to the investors or transferred to another agent of your choice. iFAST has the responsibility to ensure that all liabilities and obligations to all clients have been fully discharged or provided for, and that proper arrangements have been put in place. As for rebalancing, this is done irrespective of whether the robo is a going concern. At MoneyOwl, we believe that in order to have a good investment experience, one should stay invested for the long term. One way is to ensure that you remain invested in the portfolio that reflects the risks of asset allocation that you can accept. As such, regular rebalancing is done for all our clients at MoneyOwl. You can read more about how we manage your money here https://www.moneyowl.com.sg/#/faq Also, we will be having our first investment symposium on the 25th May. You can sign up for the event here to find out more about how we manage your investments. https://www.eventbrite.sg/e/moneyowl-investment-symposium-registration-60702740531 Hope this helps allay some concerns you might have.
  • Asked by Rochak Agrawal

    Amanda Ong
    Amanda Ong, Head Of Client Engagement & Pr at Stashaway
    Level 3. Wonderkid
    Answered 1d ago
    Hi John, Just jumping in to clarify some of points above. Our pricing structure ranges from 0.2-0.8% i.e the more you invest with us or as your AUM grows, the lower it gets. The 0.1% currency conversion fee is charged by our broker and is actually much lower than what you would get if you converted with your bank. If you'd like to save on your fees, you can also consider our referral programme here :)
  • Asked by Low Rui Jia

    Eddy Cheong
    Eddy Cheong
    Level 2. Rookie
    Answered 2d ago
    Thank you, Low Rui Jia, for your question. I will answer it in the following way. (1) Who is recommended to invest? Basically anybody who needs to grow wealth should invest so that money works harder than leaving as bank deposits. But before investing, you should be financially healthy, just like you need to be physically healthy to run a marathon. A good financially health means having sufficient emergency fund, avoiding excessive debts and getting major protection risks covered, put you on a firm foundation that strengthen your ability to stay invested in the long term. (2) You should stay invested in the long term For a successful investing experience, staying invested is necessary in order to capture long term market return. While there will always be short term fluctuations, stock markets go up in the long run because of higher corporate earnings driven by demand of goods and services due to growing global population and rising affluence. But staying invested during market volatility is difficult because of human nature. Even though our HEAD knows that (1) there will always be short term market fluctuation, (2) markets always recover and (3) markets go up in the long term, our HEART usually fails to follow through, resulting in missed investing opportunities. (3) A Trusted Adviser Hence it is important to seek good advice and invest with those you can trust. Trust means trustworthy, competent, and one who is able to journey with you to help you stay on course through turbulent times in order to reap the benefits of investing. MoneyOwl believes in this philosophy of trust and competency.. Even though we have a few robos (insurance, will-writing, investment), we called ourselves as bionic adviser. By bionic, it means we combine the precision of technology with the wisdom of human advisers to give you the advice you need. On top of that, our conflict-free salaried advisers are there to risk coach and help you understand how markets work and encourage you to stay invested. It may interest you to know that MoneyOwl is a JV between 2 trusted brands - 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 since 2003, known for its best-in-class expertise and ethical advisory practice. We are thus confident to bring our services to the Singapore mass market, with this unique parentage that brings a combination of mission and expertise.
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