As a business-friendly, English-speaking financial hub, Singapore was primed to assume the role of a FinTech capital. Over the past years, Singaporean retail investors have seen a deluge of FinTech startups entering the market, from epayments to blockchain platforms to peer-to-business lending.
Roboinvesting is one of the areas that have seen a spike in the number of players, with companies such as StashAway, Syfe, Endowus, AutoWealth and so on. The intense competition has already claimed a victim, Smartly. [Note: I’ll share my take on potential bankruptcies at the end] Singapore’s traditional banks have also jumped into the fray with DBS and OCBC releasing their own roboinvesting services, digiPortfolio for the former and OCBC RoboInvest for the latter.
Roboinvesting relies on automation to invest customers’ money. There is no active investment manager, hence, the cost is typically kept to a low yearly fee. Investors generally just need to select their risk preference and deposit in money accordingly.
StashAway’s management and products
I have used StashAway for just over half a year and I must say that I’m quite pleased with the service. StashAway was founded by former CEO of Zalora Group, Michele Ferrario, and investment banker, Freddy Lim. Michele’s Zalora experience appears to have been a key factor in making the mobile customer experience so e-commerce friendly.
As Chief Investment Officer, Freddy is responsible for sharing most of the market updates and the investment strategy behind StashAway. He does this through the app’s video releases, webinars and portfolios. Freddy grew up in Malaysia before leaving to study at Monash University in Australia. He spent most of his career working in Japan.
StashAway has three key products:
i. General Investing portfolio
ii. Income portfolio
iii. StashAway Simple
General Investing. I have used General Investing for its exposure to US and EU equity markets — mostly ETFs in healthcare, gold and bonds. Recently, because of Covid-19, StashAway re-optimised its portfolio to include China tech (KWEB). Here’s a breakdown of the General Investing stocks, as seen from my Yahoo Finance watchlist (prices as of 29 June):
I don’t use Income portfolio, so I don’t know what the specific products are. What I know is that funds go into Singapore equities, bonds, REITS and other Asia stocks. I did not open an Income portfolio because it had a requirement of a minimum $10K deposit. This minimum deposit was the reason I opened up the ‘Asia’ portfolio with DBS’s digiPortfolio. I’ll explain further below.
StashAway Simple works like a fixed deposit with up to 1.9% p.a returns, except that there is no lock-in period. It would have been an awesome product, if not for another FinTech player Singlife. The insurance provider has a product that pays up to 2.5% p.a with no lock-up. Hard to beat.
My verdict: Go for it! The beauty of StashAway is that you can deposit money into your portfolio any time you like or automate the deposits — all for just a 0.8% annual fee. It is really nice for folks who want to save in small amounts consistently, and for those who want to dip their toes into retail investing. If you sign up with my link, you will get up to $10,000 SGD managed for free for 6 months.
Next up: digiPortfolio…
I opened up digiPortfolio because I wanted exposure to Asian markets. The setup was ridiculously easy. As long as you have an existing bank account with DBS, setting up digiPortfolio is just a couple of clicks. Otherwise, you will need to first open a DBS account (Multiplier and/or Multi-Currency Autosave account), before setting up the roboinvesting service. The bank account setup includes things like verifying your address and other requirements.
digiPortfolio offers two products: (i) an Asia portfolio and (ii) a Global portfolio. The latter requires a Customer Assessment Review (CAR) test to see if you are suitably qualified for the risks. The Global portfolio invests one’s money into something called Specified Investment Products that have a higher risk, in this case UK-listed ETFs. I did not open (ii) because I already have Europe equity market exposure through StashAway. If you are new investor, I think passing the test is simply just taking an SGX course. OR, you could just buy into StashAway’s General portfolio that buys the Vanguard Europe Index ETF.
Another thing about DBS’s digiPortfolio, you will need a minimum of $1000 for both accounts. Thereafter, you can top up smaller amounts. StashAway, on the other hand, allows for small top-ups from the get go.
For those of you who are considering the digiPortfolio, here is a breakdown of the equities and fixed income products in the Asia portfolio:
My verdict: This service not as mobile-user friendly as StashAway. It doesn’t allow you to monitor your investments and chart the progress. It merely indicates the current indicative value, via the DBS digibank app.
Also, you will need at least $1000 to start an account, and if you’re not a DBS bank account holder, you will need to set up one. I say try the other roboinvestor focused services like StashAway or Syfe, before dabbling with digiPortfolio.
With regards to these roboinvesting platforms going bankrupt, we’ve checked with StashAway and here’s what they had to say:
“StashAway is built on very solid foundations, and as part of MAS requirements needs to always have a significant capital base, it is therefore unlikely that StashAway will start bankruptcy procedures.
We also recommend that you take a look at our ‘About Us’ page. Our advisors are people whose biggest asset is their reputation, and they have chosen to put their name behind the brand. Our financial backers include Eight Road Ventures, the proprietary investment arm of Fidelity International, who did extensive due diligence before deciding to invest with us…
In the unlikely event that StashAway is declared bankrupt, following MAS restrictions, StashAway has ensured that customers’ funds are protected by the custodian relationships with SAXO (brokerage) or Lion Global for Simple and their custodian institutions, such that those funds are kept separate and un-mingled.”
In short, these startups have financial backers who will ensure that customers’ money is not lost, thanks to Monetary Authority of Singapore regulation. When Smartly folded, it was reported that the company returned “related monies to its customers’ bank accounts within three to six business days”.
If you’re interested to sign up for StashAway, please do so with my link and you will get up to $10,000 SGD managed for free for 6 months. Please use my link, so that I can also benefit with 6 months fee waived, especially if you found my article useful.
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