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Robo-Advisor Portfolios in Singapore had a tough 1H2022 on an absolute basis, down anywhere from 11% to 35%. However their Flagship portfolios outperformed benchmarks while Thematic portfolios bombed.
We recommend investing bulk of your portfolio in passive strategies.
Endowus remains our preferred Robo-Advisor in Singapore due to a relatively passive approach, better user experience and an option to invest CPF funds.
On Endowus, you can easily invest all your money, including eligible CPF funds, in low-cost, globally diversified passive portfolios that are appropriate for your risk appetite.
Most investors would be glad to put a uniquely terrible 1H2022 behind them. This year has been unusual compared to recent history because both, the equity and the fixed income market are down in double digits.
As this chart from StashAway shows, this hasn’t happened at least since 1985. There have been a couple of years where both asset classes have been down. But in 2001, the first such year since 1985, bonds were down only 1% while in 2015 equities were down only 0.3%.
In the first 6 months of this year equities are down 20.3% and fixed income is down 14.8%. So if you’ve lost money this year, you could take some comfort in knowing that you are not alone.
If you are up this year, Congratulations! You are a rare bird.
The top 3 Robo Advisors in Singapore put out notes reviewing their 1H22 performance.
We dug into the numbers on the websites of a couple more to compare how they all did so far.
Robo Advisors are still quite new and their products and portfolios are still evolving so we didn’t find enough data to do a meaningful comparison of their longer term performance, say over 3 years or 5 years. We should start seeing that data in another year or so.
It’s no surprise that all the portfolios were down in 1H2022.
We picked 5 different types of portfolios where we were able to compare performance across at least 3 Robo Advisors in each case – two flagship portfolios, 2 thematic portfolios and a money market alternative portfolio.
For the flagship portfolios, we looked at the highest risk portfolio offered by each Robo and a balanced portfolio which was most similar to the traditional 60:40 Equity: Fixed income portfolio.
For the thematic portfolios, we looked at Technology and ESG portfolios, which are each offered by 3-4 Robos.
We used SGD returns where provided by the Robo and adjusted the returns for the SGD depreciation of 3.7% in 1H2022 if only the USD return was provided.
We also believe that all the performance numbers do not factor in the impact of the fees charged by the Robos. However this was not clearly specified by some of the Robo Advisors.
Each Robo Advisor uses a different benchmark to evaluate their own performance. Since we don’t know how these benchmarks are constructed, we used our own benchmarks for the flagship and technology portfolios.
For the equity portion of the flagship portfolios, we used MSCI All-Country World Index (ACWI). This index tracks the performance all major stock markets globally. Some Robos prefer the MSCI World, which only tracks the developed countries.
Since the average investor in Singapore has the option of investing in emerging markets like China and India, we feel the MSCI ACWI is a better choice.
For the Fixed Income portion of the portfolio, we couldn’t find a good global bond index with historical performance data (although FTSE, Bloomberg etc. have a few behind paywalls). So we created a portfolio of two ETFs – IUSB and BNDX with a 60:40 ratio. IUSB is an ETF that tracks the total return of US Bond market while BNDX does so for International Bonds ex-US.
We then created a benchmark for each Robo based on the mix of Equity and Fixed income each of their portfolios. This was necessary because the asset mixes of the portfolios we compared were often quite different. So using the same benchmark did not seem right.
For instance the highest risk flagship portfolio at Endowus and Syfe have 100% Equity allocation. This is 91% for StashAway, 83% for DBS digiPortfolio and 81% for Kristal.
Without this adjustment, the portfolios with a higher equity allocations will always appear to outperform in bull markets and underperform in bear markets. Since the risk profile of a 100% Equity portfolio is quite different from an 81% Equity portfolio, we felt the need to adjust the benchmarks similarly.
This is why you see different benchmark performance numbers in the tables below. To be clear, this adjustment is not very scientific but is the best we could do for now.
The all-Equity or equivalent portfolios were all down mid-teens percentages in 1H2022.
Table 1: Performance of highest risk Flagship Portfolios in 1H2022
| Robo-Advisor | 1H2022 Performance |
Asset Class Mix* |
Benchmark | % Relative Performance |
|---|---|---|---|---|
| Endowus | -16.4% | 100:00 | -18.2% | 1.8% |
| Syfe | -13.9% | 100:00 | -18.2% | 4.3% |
| StashAway | -15.5% | 91:07 | -17.1% | 1.6% |
| digiPortfolio | -14.3% | 83:17 | -16.4% | 2.1% |
| Kristal | -17.2% | 81:19 | -16.2% | -1.1% |
| Average | -15.5% | 1.7% | ||
| * Equity : Fixed Income | ||||
In both absolute and relative to benchmark terms, Syfe’s Core100 was the best portfolio, down only 13.9% in 1H2022 and it outperformed our benchmark (ACWI, down 18.2%) by 4.3%.
4 out of 5 Robo Advisors outperformed our benchmarks.
The Balanced or equivalent portfolios did a little better. They were down 12.6% on average. Again, 4 out of 5 of these portfolios outperformed our benchmarks.
Table 2: Performance of Balanced Flagship Portfolios in 1H2022
| Robo-Advisor | 1H2022 Performance |
Asset Class Mix* |
Benchmark | % Relative Performance |
|---|---|---|---|---|
| Endowus | -14.8% | 60:40 | -13.9% | -0.9% |
| Syfe | -12.6% | 47:53 | -12.6% | 0.0% |
| StashAway | -11.7% | 64:36 | -14.6% | 2.9% |
| digiPortfolio | -12.2% | 58:42 | -13.7% | 1.5% |
| Kristal | -12.0% | 53:47 | -13.2% | 1.2% |
| Average | -12.6% | 0.9% | ||
| * Equity : Fixed Income | ||||
StashAway’s 22% SRI portfolio did the best here, outperforming by 2.9%.
The performance of Technology thematic portfolios was horrendous across the board. Not only were they down 32.6% on average, they underperformed our benchmarks by 8.1% on average. All 4 of them underperformed.
Table 3: Performance of Technology Thematic Portfolios in 1H2022
| Robo-Advisor | 1H2022 Performance |
Asset Class Mix* |
Benchmark | Diff |
|---|---|---|---|---|
| Endowus | -34.8% | 100:00 | -27.3% | -7.5% |
| Syfe | -35.4% | 100:00 | -27.3% | -8.2% |
| Stashaway | -33.3% | 72:28 | -21.8% | -11.6% |
| Kristal | -26.8% | 100:00 | -21.6% | -5.2% |
| Average | -32.6% | -8.1% | ||
| * Equity : Fixed Income | ||||
StashAway’s 45% SRI Tech Enablers portfolio has 28% fixed income allocation while Kristal’s High Growth ETF has only 38% Tech allocation. So we adjusted our benchmarks for them to include similar allocation of Fixed Income and MSCI ACWI respectively.
For ESG Portfolios, we used MSCI ACWI as the benchmark for the Equity portion and our Fixed Income benchmark for the fixed income portion.
Table 4: Performance of ESG Thematic Portfolios in 1H2022
| Robo-Advisor | 1H2022 Performance |
Asset Class Mix* |
Benchmark | % Relative Performance |
|---|---|---|---|---|
| Endowus | -22.4% | 100:00 | -18.2% | -4.2% |
| Syfe | -16.4% | 100:00 | -18.2% | 1.8% |
| StashAway | -13.5% | 84:16 | -13.0% | -0.5% |
| Average | -17.4% | -1.0% | ||
| * Equity : Fixed Income | ||||
Syfe’s ESG & Clean Energy portfolio did the best in relative terms here, outperforming the benchmark by 1.80%.
StashAway’s Responsible Investing portfolios were down only 13.5% by end-Jun but they were launched on 19 Jan 2022. MSCI ACWI was down 3.5% between 31 Dec 2021 and 19 Jan 2022. After this adjustment, the Responsible Investing portfolio underperformed the benchmark.
Table 5: Performance of Cash Portfolios in 1H2022
| Robo-Advisor | 1H2022 Performance |
|---|---|
| Endowus | 0.45% |
| Syfe | 0.56% |
| StashAway | 0.56% |
StashAway & Syfe did not disclose the performance of their money market type funds. They both have identical underlying funds in these portfolios. We used the performance figures of the underlying funds to estimate the performance of these portfolios.
Investors should focus on the investment process followed by the platform or funds they invest in. Short-term performance (daily, monthly or even annual) is of very little use in understanding how the platform will perform over a longer period of time.
There are thousands of funds, managed portfolios and thematic ETFs available to us for investing. Just as most of us have no ability to consistently pick the best stocks, we also have no ability to know which manager or platform is going to outperform the market.
This is why we recommend a passive strategy for the bulk of your investable assets.
However none of the Robos in Singapore offers a truly passive option, especially for CPFIS.
Endowus and MoneyOwl come the closest but even their flagship portfolios carry factor tilts in underlying funds and their CPFIS portfolios are built using actively managed funds.
While its correct that the flagship portfolios of many Robos have outperformed their benchmarks in 1H2022, we do not think it proves anything about their ability to outperform on a sustainable basis.
Just look at their Tech portfolios for a contrast.
We suspect quite a few of them launched Tech thematic portfolios in the last couple of years because the sector was on such a tear since 2009. Well, right on cue, Tech has collapsed AND all of them have underperformed the Tech benchmark (NASDAQ) by a wide margin – 8.1% on average. In just 6 months!
Same thing with China. A number of platforms wrote very positive views on Chinese equities in the middle of last year. The China Tech ETF, KWEB, had a large weight in many portfolio. Right before the China tech crackdown last year and the lockdowns this year.
We think retail investors should allocate the bulk of their portfolios to passive strategies and think of the rest as being a part of their entertainment budget.
Questions? Suggestions? See a mistake? Write to us!
Robo-Advisors in Singapore had a mixed 2H2022. Their Flagship portfolios underperformed while some Thematic portfolios did well.
MoneyOwl is offering up to S$500 in FairPrice vouchers to the first 400 customers who complete a one-time top up of their SRS accounts before 31 Dec 2022.
We prefer Endowus over MoneyOwl for CPF portfolios as they offer more diversified equity exposure, more choices and a better user experience. We think it's worth the slightly higher fee.
