Robo advisors are an increasingly popular choice among the younger generation of investors. But with more choices than ever, which should you choose (and why)? Here are our top five picks.
As of 2020, Singaporean robo advisors are estimated to command about $1.5 billion in assets under management, spread out over about 105,000 users.
Although this is but a fraction of the country's $3.4 trillion asset management industry, their growth is promising, and they are increasingly becoming part of the 'standard' investment menu - especially among the younger generation.
But their growing popularity also means that investors today have quite a few robo advisors to choose from. So, as part of SingSaver's mission to simplify personal finance for our readers, here are our picks for the five best robo advisors in Singapore - each the leader in their own unique category.
Note: If you're not sure what robo-advisors are all about, check out our complete guide to them here.
|Robo Advisor||Primary Advantages||Drawbacks|
|StashAway||– Maximum transparency – Highly user-friendly – Relatively well-capitalised||Fees are on the higher side for smaller amounts|
|Kristal.AI||Most attractive fee structure Gives you the DIY option of building your own portfolio||Not so transparent or user-friendly|
|Endowus||Allows you to invest in actively managed funds as well as ‘active-passive’ funds Allows you to invest your CPF Ordinary Account funds at competitive rates||Funds may carry higher expense ratios than standard ETFs Relatively high minimum investment amount and account size|
|Syfe||Gives you exposure to a Singaporean REIT index||Company is thinly capitalised|
|UOB Utrade Robo||Run directly by a bank, so very little chance of business failure Most competitive fee structure among bank-run robo advisors||More expensive than non-bank robo-advisors Does not tell you the ETF options upfront|
StashAway: Most transparent and user-friendly
Fees: 0.8 per cent per annum management fees for the first $25,000. Decreases by 0.1 per cent each tier to a low of 0.2 per cent for amounts above $1,000,000.
Does not include ETF fees - estimated at 0.2 per cent per annum (0.4 per cent for its Income Portfolio) - or currency conversion fees of about 0.08 per cent. Unlimited free withdrawals.
Minimum investment: None for SGD deposits. $10,000 for its Income Portfolio
StashAway wins big marks for being the most transparent and user-friendly robo advisors in Singapore. It tells you every single one of its fees upfront, such as the ETF fees and currency conversion fees - something many other robo advisors are less than transparent about.
Users can have exposure to 33 global ETFs for regular investments, 6 Singapore/Asia-focused ETFs for its Income Portfolio, and 2 money market funds for its cash management account - StashAway Simple.
However, like most robo advisors, you cannot select the ETFs yourself. You can only change something called your Risk Index score, and StashAway will have its own portfolio mapped to each score.
The Risk Index tells you the riskiness of a portfolio, for instance, a 30 per cent Risk Index score means that there is a 99 per cent chance (based on Value at Risk methodology) that said portfolio won't decline by more than 30 per cent in a year.
On the downside, StashAway is one of the more expensive robo advisors out there. Despite its less-competitive fees, it has enjoyed strong popularity, likely because of the very reasons it ended up on this list - maximum transparency and user-friendliness.
According to Crunchbase, StashAway has raised $28.3 million to fund its operations so far - with its last funding round being a Series B - making it relatively well-capitalised.
Kristal.AI: Best value and control
Fees: No management fees for accounts up to $70,000, 0.3 per cent p.a. thereafter. Does not include ETF fees and FX conversion fees of 0.2 per cent. Exceeding 25 transactions per months will also incur an undisclosed custody and asset operating fee.
Minimum investment: None, but a minimum of $7,000 is recommended. Individual ETFs also have minimum balances.
Kristal.AI easily offers the best cost structure and greatest control among all the robo advisors out there. With zero management fees up to $70,000 and only 0.3 per cent thereafter, investors focusing on expenses should have no issue choosing Kristal.AI immediately.
Furthermore, it also offers the greatest control. While the algorithm can create portfolios for you, you can also choose to go 'DIY' and construct your own portfolio out of individual ETFs (over 100 options available).
Despite its undisputed upsides, there are downsides as well. For one, it is not the most user-friendly or transparent. For instance, exceeding 25 transactions amount will also incur a broker fee - the amount of which it does not disclose. Its FX conversion fee of 0.2 per cent is also higher than most.
Finally, while zero minimum balances are technically true, individual ETFs may have their own respective minimum balances.
According to Crunchbase, Kristal.AI has raised $12.6 million in funding so far - with its last round being a Series A. Hence, the company is also newer, less-tested, and less-capitalised.
Endowus: Best for investing in more actively managed strategies (and CPF funds)
Fees: 0.4 per cent p.a. flat on CPF/SRS funds, 0.60 per cent for regular investments up to $200,000 and 0.05 per cent for Cash Smart.
Minimum investment: Minimum investment and account size of $10,000
Endowus has two unique advantages over the competition. The first is that you can invest funds in your CPF Ordinary Account, and do so at a flat management fee of 0.4 per cent p.a.
Second, it allows you to invest in more actively managed strategies. It has access to 'active-passive' funds, namely from the famous Dimensional Funds.
Instead of merely tracking established indices, Dimensional Funds constructs its own indices based on its own 'dimensions' (such as asset growth). It has a couple of purely passive funds and a few actively managed ones.
The downside of this is that these funds will carry higher expense ratios compared to purely passive ETFs (some as high as over 1 per cent p.a.).
As such, your total 'all in' fee for the year may be significantly higher compared to other robo advisors, depending on which funds go into your portfolio.
However, because all funds are SGD-denominated, there are no currency conversion fees and Endowus also explicitly refunds any 'promotional commissions' - known as trailer fees - that the fund manager might pay to Endowus.
Its fund selection is less extensive, at only 18 total. There are also only six model portfolios available, each based on different allocations between stocks and bonds. Another downside is its relatively high minimum investment and account size of $10,000.
Syfe: Best for gaining Singaporean real estate exposure
Fees: 0.65 per cent p.a. up to $20,000, 0.5 per cent up to $100,000, 0.4 per cent up to $500,000. Does not include ETF fees and a 0.10 per cent currency conversion fee.
Minimum investment: None
Syfe makes this list for its one unique advantage: allowing you to get exposure to Singaporean real estate through its Singaporean REITs portfolio.
While it's true you can purchase individual REITs yourself, Syfe's REITs portfolio tracks the SGX iEdge S-REIT Leaders Index, covering all the top Singaporean REITs. It would also be difficult for retail investors to gain exposure to this index themselves. You can also opt for automatic risk management for this REITs portfolio.
Other than its REITs portfolio - and a complimentary call with a financial advisor - Syfe is nothing to shout about. Its fees are average, and so is its array of available funds and portfolios.
Not including its REIT portfolio, it has a 100 per cent equity portfolio (comprised of 10 ETFs) and a global portfolio of 22 ETFs. The latter also has 11 risk options you can choose from.
According to Crunchbase, Syfe has only raised $5.2 million in funding thus far - from a single seed round - making it rather thinly-capitalised.
UOB Utrade Robo: Best bank-run robo advisor
Fees: 0.88 per cent p.a. up to $50,000, 0.68 per cent up to $100,000, 0.5 per cent above $100,000.
Minimum investment: $5,000 per portfolio with a subsequent $500 minimum deposit amount
The shuttering of robo advisor Smartly in March 2020 has no doubt created some scepticism in the country surrounding the industry. Competition in the space is intense and it was the reason Smartly could no longer sustain operations.
It's also why we are listing out fundraising numbers where available; the more funds they have, the lower their chances of being forced to close.
But if you want the highest degree of safety possible when using a robo advisor, then your best bet is to go with one of the bank-run ones. With a history spanning 85 years and over $30 billion in market capitalisation, UOB is not likely to go out of business any time soon.
And out of the bank-run robo advisory services, UOB's Utrade Robo has the most competitive fee structure - hence their position on this list.
Still, their fees are relatively high compared to other robo-advisors, and transparency leaves little to be desired: it does not tell you upfront which ETFs it invests in.
That said, this is something that all the bank robo advisors have in common. In short, if you would only feel comfortable with a bank-run robo advisor, go with Utrade Robo.
This article was first published in SingSaver.com.sg.