Robo advisors in Singapore are seeing rapid growth.
Robo advisors first emerged in 2008 as a result of the financial crisis. As time passed and digitalisation began to play a more prominent role in society, robo advisors grew in tandem. In fact, the assets under management (AUM) in the robo advisory segment is projected to hit US$2.845 trillion by 2025. Interestingly, a study also forecasts that the Asia Pacific market will have the highest growth rate from 2021 to 2026.
What makes robo advisors attractive? Lower fee and initial investment amount, for the starters. By lowering the barriers robo advisors in Singapore make investing is more accessible for the masses. The risk of emotions influencing trading decisions can also be avoided. Furthermore, one can invest easily from anywhere, bringing the world of investment to the tip of one’s finger. In terms of regulation, robo advisors are regulated by the Monetary Authority of Singapore (MAS) and will need to be licensed under the Securities and Futures Act (SFA) and/or Financial Advisers Act (FAA).
In the 2019 Singapore Asset Management Survey that was released by MAS, it was reported that Singapore’s AUM rose by 15.7% in 2019 to reach S$4.0 trillion or US$2.9 trillion, indicating a growing appetite. In 2020, as the Coronavirus pandemic ravaged the world and left in its trail a string of lockdowns and market uncertainties, it was discovered that there was a surge in business-to-business (B2B) robo advisors and digital investing across the world. Will these factors be catalysts for the further growth of the robo advisory industry?
Robo Advisors in Singapore
Among the robo advisory companies in Singapore are AutoWealth, Endowus, Kristal.AI, Money Owl, Philip SMART Portfolio, SquirrelSave, StashAway, and Syfe. There are also traditional financial institutions that have dipped their toes into the waters of robo advisory such as OCBC (OCBC RoboInvest), and UOB (UOB Utrade Robo).
With so many options available it might be difficult to pick the right one, we look at four popular robo advisors and Singapore and explore if it’s the right one for you:
Birthed in 2017, StashAway has been rapidly growing and in 2021, it manages an AUM of USD$1 billion. In 2020, it recorded returns of 21.9% (for its highest-risk portfolios) and 3.4% (for its lowest-risk portfolios). There is no minimum investment amount, but there is a requirement of S$10,000 investment amount for income portfolios. Its annual fees range from 0.2% to 0.8%, depending on the total investment amount. For investments above S$1,000,000, the annual fee is at the lowest tier of 0.2%. Investors will also be able to enjoy unlimited free withdrawals and free transfers between portfolios.
Suitable for: Those looking to invest larger amounts, given the lower annual fee.
A really interesting feature of Endowus is the fact that the investors will be able to use their Central Provident Fund (CPF) and Supplementary Retirement Scheme (SRS) savings to invest. In terms of fees, there is an all-in-one fee that ranges from 0.05% to 0.60%. However, there are no sales charges or transaction fees, and investors will also enjoy a 100% rebate of trailer fees.
Suitable for: Those looking to invest using their CPF and SRS funds.
A unique feature of Syfe is that it offers a Real Estate Investment Trust (REIT)-specific portfolio. The annual management fees range from 0.4% to 0.65%. The fee depends on the tier the investor falls into, and each tier is differentiated by the total investment value that the investor holds. The Gold Tier enjoys the lowest rate of 0.4% but the investor will need to have a total investment value of S$100,000. There is no entry or exit fee charged and investors will also enjoy unlimited free withdrawals and rebalancing.
Suitable for: Those looking to invest in REITs through a robo advisor.
With MoneyOwl, there is a minimum investment of S$100 (one-time investment) and S$50 (monthly investment). Effective Aug 12, 2020, the annual fees have been revised to:
- S$10,000 and below: 0%
- S$10,000.01 to S$100,000: 0.6% per annum
- S$100,000.01 and above: 0.5% per annum
Suitable for: New investors and those looking to invest monthly with a lower amount.