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Mini-Review: DBS digiPortfolio

by Apoorv Trivedi on

The Bottom Line

digiPortfolio is a managed portfolio service offered by DBS where you can buy ready made portfolios that are tailored to your risk appetite. The portfolios are made of ETFs that invest in equity and fixed income globally, are low cost and tax efficient.

We felt that while digiPortfolio was easy to use it missed a lot of basic features like recurring investments, seamless FX conversion and rebalancing. Lack of a fixed deposit alternative and even SRS investment option was also a problem. digiPortfolios have a simple platform fee of 0.75% of AUA and are more expensive than most peers.

digiPortfolio is not our preferred option for because they use an active investing approach and the platform is missing some must have features. Because of the missing features, this is only a mini-review and we will conduct a full review when the feature set is more complete.

DBS digiPortfolio

A managed portfolio service by DBS that is missing some key features but was easy to use overall.

What is digiPortfolio by DBS?

digiPortfolio is a managed portfolio service offered by DBS. It offers two portfolios (Asia & Global) with differing mix of equity, fixed income and cash for different risk levels at a flat platform fee of 0.75%.

Two portfolios, 0.75% flat fee
Active portfolios managed by DBS Team

How is it different from other Robo-Advisors like Endowus etc.?

Actively Managed Portfolio digiPortfolio is an actively managed portfolio service, similar to FSMOne MAPS. Portfolio construction is done by their team of experts and the customer manually chooses the risk level appropriate for them. The portfolio is constructed using ETFs but the ETFs and their weighting are manually set and can change every quarter.

Non-US ETFs The Asia Portfolio is constructed using SGX listed ETFs while the Global portfolio uses UK Listed UCITS-compliant ETFs. While these do not need to pay the dividend withholding tax that US listed ETFs pay, they also have higher management fee on average. This may be the reason for the higher 0.29% avg. management fee paid by these portfolios vs. the 0.20% paid by competing Robos that use ETFs.

High Cash Allocation While most other Robos maintain a cash allocation of 1% to pay fees and other charges, DBS had 4-5% cash in their portfolios, which could be inefficient. This is apparently to take advantage of opportunities that may arise.

Limited Options digiPortfolio seems to be in its early days with fairly limited set of options available at the time of writing. There are only two portfolios to choose from (6 in all, including the 3 risk levels for each portfolio), there is no recurring investment option, no CPF or even SRS option and no very low or very high risk product (risk-rating of 1 or 5). Unlike other Robos investing in USD denominated ETFs, digiPortfolio does not automatically convert S$ to US$. Instead you must open a multi-currency account and convert currencies yourself before investing. DBS promises 3-5 working day turnaround for all transactions, investments, top-ups or withdrawal, which is higher than other Robos.

Expensive Its flat fee of 0.75% puts digiPortfolio in middle of its peer group for small portfolios below S$30K. For larger portfolios, it was consistently among the more expensive options as peers reduce fees with rising AUA.

What does the Robo do?

According to DBS, the Robo is involved in back testing, rebalancing and monitoring the portfolio. The actual portfolio construction is done by their investment committee. There is no advice element to the Robo as digiPortfolio does not assess your risk profile in any way.

While investing you have to choose a one of the two portfolios (Asia and Global) and a Risk level (among 2, 3 and 4, called Slow n’ Steady, Comfy Cruisin’ and Fast n’ Furious! Will 1 be Sleepy?) which determines the asset mix and the ETFs making up the portfolio. Equity allocations range from 18% to 80% between the portfolio. The Asia portfolio has 4% cash allocation while the Global portfolio has 5%.

Three step process

We think the 3 risk levels are supposed to correspond to 20%, 55% and 80% equity allocation with the cash allocation being reduced equally from Equity and Fixed Income for the Asia portfolio and from the fixed income portion for the Global portfolio.

Portfolio Construction DBS did not disclose the exact mix of the portfolio either by sector or by country. However looking at the ETFs used to make these portfolios, our conclusion is that the portfolios are quite simple with 6-9 ETFs but have a large active allocation around countries and sectors.

For e.g. the Slow n’ Steady Asia portfolio has Singapore ETF, Asia ex-Japan REIT ETF, China ETF and Hang Seng Tech ETF – no Japan, Taiwan, Korea, India. The higher risk Asia portfolios include an India ETF but still no Japan, Taiwan or Korea.

The Slow n’ Steady Global portfolio has MSCI World ETF, China ETF and Gold Miners ETF (!). The higher risk Global portfolios have S&P500, Europe, China, Asia ex-Japan, Japan and Gold Miners (!) ETFs.

Without knowing weights of each of the ETFs (as most Robos disclose) it is not possible to assess exactly how different these portfolios are from a truly passive benchmark but it would seem that they are very different.

Their own FAQ seems to acknowledge the concentration of these portfolios, when it advises against investing only in digiPortfolios i.e. they do not consider these to be all-in-one portfolios, as some of the Robos do, and which arguably is supposed to be the point of Robo-advisors.

What are their fees like?

digiPortfolio has simple fee structure with a flat fee of 0.75% of the assets under advice (AUA). We also added a 0.29% estimate management fee for the ETFs in the portfolios. This was based on the total cost estimate of 1.04% for managed portfolios that DBS uses in their NAV Planner.

The single tier makes then somewhat competitive for small portfolio <S$30K AUA but because competitors reduce the platform fees a fair bit for higher AUA, digiPortfolio ends up being one of the more expensive options for larger portfolios. It consistently ranked 8th or 9th out of 12 for most AUA sizes in our calculations. That is still a lot cheaper than buying mutual funds from DBS or FSMOne and in fact very similar to the total fees of our pick, Endowus.

Is it safe?

I mean its DBS… what? 🤷

How does it work?

digiPortfolio is quite simple and intuitive to use for investing but it does have a number of limitations that come from being a relatively new product and a small part of a very large product portfolio, that DBS has. If you already have an account at DBS, you can explore the product without needing to apply or sign-up for the product. Simply log in to the site or the digiBank App and look for digiPortfolio under “Invest”.

You do however need a multi-currency account (MCA) to invest in these portfolios, even the SGD denominated Asia portfolio. You need to convert SGD to USD yourself if you want to invest in the Global portfolio and don’t already have USD in the MCA. If you open the MCA for the purpose of investing in digiPortfolio then the MCA does not have minimum balance requirements and the fall-below fees are waived. However if you have an existing MCA holder then you run the risk of being charged the fall-below fee.

Another issue we ran into during our testing was that the digiPortfolio was conducting portfolio rebalancing during the week and warned us that we would not be able to transact during the period if our portfolio was being rebalanced. That seems like a long time to be locked out of investing or withdrawing funds and the rebalances happen every quarter.

7 days?!

All these small annoyances add up to a less than smooth experience of investing on the platform. We hope a lot of these will be fixed in the near future and we will then be able to do a full review of the product.

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