SeedlyTV EP04

Robo Wars: How You can Start Investing Easily! LIVE on 7th May 8-9pm! Don't miss out!

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SeedlyTV EP04

For the first time ever, we have assembled (not the Avengers) but the 5 Robo-Advisors in Singapore, all gathered in one room! SeedlyTV EP04 presents: Robo Wars - How You Can Start Investing Easily. You can check out what was covered here:

  • What are robo-advisors? -- 2:30-3:25
  • Robo-advisors introducing themselves-- 3:26-8:45
  • (Mini Icebreaker) Who are the robo-advisors investment idols?-- 9:05-15:25
  • (Q&A) Why choose robo-advisors when I can invest in funds?-- 16:00-21:45
  • Does your robo-advisor do rebalancing of portfolio?-- 21:50-25:42
  • (Q&A) How can a person who is uninitiated in investing start investing with these robo-advisors? What is the catch and what are the risks?-- 25:47-29:12
  • (Q&A) How can you determine your risk level for robo-advisors?-- 29:15-31:20
  • (Q&A) Without much track records, how can we choose between robo-advisors?-- 31:40-33:14
  • Do the robo-advisors have any licences and how does each robo-advisor structure?-- 33:20-43:20
  • (Q&A) What is the main advantage your robo-advisor/investing method has over your competitors (not taking into account robo-advisor fees)?-- 44:05-50:45
  • (Q&A) How can we know when to get out of the market when using robo-advisors?-- 51:05-55:45
  • (Q&A) Can all the robo-advisors describe your ideal customer?-- 55:55-1:00:00
  • Promo codes for robo-advisors-- 1:00:20-1:00:45
  • Giveaway details-- 1:01:20-1:01:55

Speakers:

NOTE: SeedlyTV is a series which will be covering topics via LIVE video and QnA on the Seedly platform. We will be inviting speakers to cover relevant topics in personal finance: Insurance, Debt, Saving, Spending and Investing. 

-This is a Seedly organised event-

Missed EP03? Watch it here: SeedlyTV EP03: How To Talk About Money and Not Die

Remember to ask your questions via the QnA section below!

  • Asked by Anonymous

    Samuel Rhee
    Samuel Rhee, Chief Investment Officer at Endowus
    Level 4. Prodigy
    Updated 2d 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

    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

    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 Low Rui Jia

    Eddy Cheong
    Eddy Cheong
    Level 2. Rookie
    Answered 4d 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.
  • Asked by Anonymous

    Christopher Tan
    Christopher Tan, Executive Director at MoneyOwl Private limited
    Level 6. Master
    Answered 4w ago
    Dear Anonymous Thank you for your question. Allow me to repost my answer to one of the questions here. Estate duty has been abolished for all assets in Singapore, whether they are movable and immovable. However, if one holds assets such as ETFs who are domiciled in a country that has estate duty such as USA, and especially so if they are custodised with that country‘s custodian, things can be complex. For MoneyOwl, the underlying instruments in our portfolios are UCITS Dimensional funds domiciled in Ireland. These funds are registered in Singapore and custodised in Singapore (iFAST). In addition, to make it even simpler, Ireland do not have estate duty. So investors do not have to pay estate duty. MoneyOwl’s parent company, Providend has been advising clients in this area for the past 18 years and since estate duty was abolished, it is their experience that clients who have unfortunately passed on did not have to pay estate duty for UCITS Funds domiciled in Ireland too. Estate duty was removed effective 15 February 2008 for Singapore. As a long term investor, it is natural that one fears that estate duty will be reinstated during the course of their investment. Before it was abolished, the estate duty charged on dutiable assets (after exemptions) was 1. 5% of the market value of the assets for the first $12 million 2. 10% of the market value of the assets that exceed $12 million What are the chances of estate duty being introduced again? It is anyone‘s guess but if we look at how much revenue it contributed to the government when it was still in place, it was a mere 0.6%. Besides, for those that would be estate dutiable (usually the very wealthy), there are many ways for them to mitigate and not pay estate duty. This is compared to the advantages of removing estate duty, specifically encouraging the wealthy to keep their wealth here and foreigners to transfer their wealth here. All these benefit Singapore. To understand more about the rationale behind the abolishment of estate duty back in 2008, you may like to read DPM Tharman’s Speech here: https://www.asiaone.com/News/AsiaOne%2BNews/Singapore/Story/A1Story20080215-49878.html Hope this clarifies and give some assurances.
  • Asked by Anonymous

    Sin Ting So
    Sin Ting So
    Level 4. Prodigy
    Answered 2w ago
    We think that it's very difficult to forecast the market or outguess other market participants, and it's time in the markets rather than timing the markets that will lead to long-term wealth accumulation. Over time, markets display efficient characteristics and investors are rewarded commensurately for the risks that they take. This is why we believe in taking an evidence-based approach, where we analyze empirical data and time-tested academic evidence, and apply it in a systematic manner rather than trying to speculate or outguess other market participants. The aim of evidence-based investing is to give you the highest probability of success in growing your wealth over the long-term. We wrote an article on market timing at Endowus Insights that you will hopefully find interesting!
  • Asked by Isaac Cheang

    Amanda Ong
    Amanda Ong, Head Of Client Engagement & Pr at Stashaway
    Level 3. Wonderkid
    Answered 2w ago
    Hi Issac, Thank you for your question! We believe that investment returns should be looked at in the medium-to-long term, and that’s why we have never really shouted about our returns so far. We are however, not shy about talking about returns, and answering to our clients’ request in July 2018, we shared our performance publicly through our First Year Anniversary email. If you’ve attended one of our StashAway Academy seminars or sent in a WhatsApp to our support and asked about our returns, we’ve probably shared those numbers with you then as well. Our clients can also check their returns on a daily basis inside the StashAway App. On performance, we generally recommend clients to have a look at our long-term backtested results on our website instead. The reason is that this actually "stress tests" our portfolios across several market corrections, economic recessions and across a much longer investment timeline. For example, it shows you how we would have performed in the Global Financial Crisis in 2008, and our portfolios' drawdown versus a benchmark. StashAway Portfolios vs same-risk Benchmarks You cannot talk about returns, without first talking about risk: it’s very easy to increase short-term returns by increasing risk, if you get lucky! Below I have attached the returns for our lowest risk portfolio, for a balanced portfolio, and for our highest risk portfolio since inception, as well as in 2018. These are 6.5%, 14% and 36% StashAway Risk Index, respectively. The StashAway Risk Index is how we classify our portfolios. In itself, it is a measure of risk (Value-at-Risk at 99%) and you can read more about what it means here. We use public benchmarks to measure our performance on a “same-risk” basis. We base the benchmarks on 2 indices: the MSCI World Equity Index and the FTSE World Government Bond Index. The benchmark chosen for each portfolio is comprised of a mixture of world equity and world bond indices that have generated the same average volatility to the relevant StashAway portfolio between the 1st of January 2007 and the 31st of December 2017. This time period was chosen in July 2018 and we will periodically review it from the risk perspective. More importantly, this time period captures a range of economic scenarios and market conditions, such as the Global Financial Crisis in 2008, the European Market routs of 2011 and the taper tantrums of 2015, together with a long bull market. For example, the table above shows that the StashAway Risk Index (SRI) 6.5% portfolio has the same risk as a 10% MSCI World Equity Index and 90% FTSE Government Bond Index portfolio, the SRI 14% portfolio is equivalent to 40% MSCI World Equity Index and 60% FTSE Government Bond Index portfolio and, the 36% portfolio has the same volatility of the MSCI World Equity Index. Since inception on 19 July 2017, our portfolios have outperformed significantly their respective same-risk benchmarks at all risk points. Our lowest risk portfolio in particular, has returned 4pp more than its benchmark, the 14% SRI portfolio has overperformed a 40%-60% portfolio by 3.1pp and our highest risk portfolio has made 5.6pp more than the MSCI Equity World.This good performance is the outcome of intelligent diversification. The above table shows cumulative returns in a 21.5-month period, which means that annualized returns of the 3 StashAway portfolios have been 3.2%, 5.2% and 11.3%, from lowest risk to highest risk respectively. As requested, I have also shared below our returns and thoughts on 2018. 2018 was a negative market for most asset classes globally. In volatile times like this it’s important to have diversified portfolios to reduce losses, and it’s very positive to keep investing in order to benefit from “low prices”. If you have been a client of StashAway during 2018, you might remember that we wrote several times that the February, October and December market losses were temporary corrections, and we recommended to stick to one’s plan. The below table does not take into account the benefits of dollar-cost-averaging, as it assumes a lump sum investment on the 1st of January 2018. In 2018, the SRI 6.5% portfolio showed losses against its same-risk benchmark (1.9pp worse performance), while our 14% SRI balanced portfolio (equivalent to 40% equity, 60% bond portfolio) and our highest risk portfolio outperformed its same risk-benchmark by 0.7pp and 3.9pp respectively. Overall, clients who read our CIO Newsletter and watch our Weekly Market Commentary , already know Freddy’s advice to not overreact, and to stick to their investment plan. Those clients would have seen a great recovery year to date in 2019. When looking at returns, we believe it is important to consider a long-term horizon. Over the short term, market ups and downs are inevitable. If in 2018 the volatility of your portfolio(s) kept you up at night, perhaps it is time to relook the risk level you have selected and whether it is in line with your risk appetite. I will leave you with an excerpt from our latest CIO Newsletter: “Today, on the other side of the same coin, we cannot emphasise enough how important it is not to get over-excited about amazing returns YTD, to stay invested, and to keep dollar-cost-averaging by sticking to your plans. Don’t try to “sell at the peak”, but also don’t bet the house on the fact that the rally will continue. Just stick to your plan.”. You can read the full article here. See Important Notice & Standard Disclaimer at https://www.stashaway.sg/legal
  • Asked by Anonymous

    Samuel Rhee
    Samuel Rhee, Chief Investment Officer at Endowus
    Level 4. Prodigy
    Answered 2w ago
    Dear Anonymous, Endowus currently is open to retail investors. There is however a minimum investment of $10,000. We started with a minimum of $100,000 and accredited investors only services, but we have broadened our service to retail clients as well with the lower minimum of $10,000. We understand that this is not a small sum, but we hope that investors will be investing through Endowus as a core part of their investment portfolio as we have built it as such. We feel that Endowus must focus on providing holistic financial and investment advice. This includes providing lifetime financial planning including retirement and goal based savings and investments, which is a core focus for us. We will be launching exciting new services in the coming months as we officially launch our services to the retail market. Currently, we are only receiving new clients through reverse enquiry. We are unlikely to lower our minimum for now, because of business and strategic reasons. But if there are any changes then we will let you know. In the meantim, please do check out our new landing page which will launch in the next week or so and learn more about what we are trying to do. Thank you! Sam
  • Asked by Gabriel Tham

    Samuel Rhee
    Samuel Rhee, Chief Investment Officer at Endowus
    Level 4. Prodigy
    Answered 2w ago
    Dear Anonymous, Endowus currently has a minimum investment of $10,000. We started with a minimum of $100,000 and accredited investors only services, but we have broadened our service to retail clients as well with the lower minimum of $10,000. We understand that this is not a small sum, but we hope that investors will be investing through Endowus as a core part of their investment portfolio as we have built it as such. We feel that Endowus must focus on providing holistic financial and investment advice. This includes providing lifetime financial planning including retirement and goal based savings and investments, which is a core focus for us. We will be launching exciting new services in the coming months as we officially launch our services to the retail market. Currently, we are only receiving new clients through reverse enquiry. We are unlikely to lower our minimum for now, because of business and strategic reasons. But if there are any changes then we will let you know. In the meantim, please do check out our new landing page which will launch in the next week or so and learn more about what we are trying to do. Thank you! Sam
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