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Kristal.AI is an investment platform where you can buy pre-built, all-in-one equity, fixed income and commodity portfolios with different risk parameters i.e. its a Robo Advisor. The portfolios are made of ETFs that invest globally and are low cost. Kristal.AI practices active asset allocation using their AI algorithms.
Kristal.AI is licensed by MAS, is regularly audited and keeps your money in a separate account under your name. At the time of review, they seem to focus more on the high net worth private wealth clients rather than the retail clients, unlike other Robos.
Their fee structure is more complex than peers since the platform fee in not the only fees you pay. Still, on our calculations, Kristal.AI was the lowest fee Robo advisor in Singapore for portfolios between S$50-500K.
Kristal.AI was not our most preferred Robo advisor in Singapore because they do active asset allocation, do not seem to use the risk assessment in portfolio selection for clients and have less sophisticated tools, website & app than peers.
Lowest cost Robo for most portfolios but active asset allocation, no CPF and no FD alternative.
Kristal.AI is an investment platform with 3 products:
We are reviewing only the Robo Advisor and the curated ETF platforms, which retail investors are eligible for and not the private wealth service.
Private Wealth Unlike other Robos we looked at, Kristal.AI is primarily focused on the private wealth customers and the offering for retail customers is relatively basic. We did not review the private wealth service, which has a wider product suite including selected Hedge Funds, VC funds and unlisted companies.
Complex Fees While the headline fee levels at Kristal.AI are simple and lowest in the market for most AUA tiers, it’s the only platform we reviewed that passes through the trading charges for your portfolios. This makes it difficult to estimate or compare fees since those depend not just on the AUM but also frequency of investing and portfolio rebalancing / switching. These charges are usually covered in the platform fees at other Robos. These charges may be meaningful for smaller portfolios but were small for portfolios larger than S$100K.
Simple portfolios The 5 pre-built Kristal Portfolios contain only 6-7 ETFs and the most aggressive High Growth portfolio had only 70% Equity exposure. Higher risk rated portfolios at other Robos contain 90-100% equity exposure. Instead Kristal.AI uses gold and commodities more aggressively than other Robos with a 21% commodities exposure in the All-Weather portfolio at the time of writing. So the overall risk level is probably not very different.
Curated ETFs Kristal.AI does not offer the ability to create your own portfolio using a set of ETFs or mutual funds as some of the peers do. However they do offer the option to trade more than 200 ETFs and you could still create a custom portfolio. Doing this would entail paying transaction charges over and above the platform fees.
No fractional shares Kristal.AI does not enable fractional ownership of shares / ETFs. This means their minimum investment amounts are high and vary by portfolio (US$1400-7000). Also additional investments in the portfolios can only be in multiples of that amount for each portfolio. The advantage of this is that your funds can be segregated not only from the platform but also from other investors funds at the custodian.
No Fixed Deposit Alternative Kristal.AI does not have a fixed deposit alternative product like most of its peers.
Kristal.AI does not reveal the methodology behind their algorithms. According to the website, the All-Weather portfolio follows the investment philosophy of Ray Dalio of Bridgewater. The other 4 portfolios use “Evolutionary Algorithms” to generate what they claim are superior portfolios.
The risk assessment process assigns you a risk level and the system does not permit you to invest in products that are above that risk level. For instance in the Advisory Algo, you can only choose settings with risk levels same as or below your assessed risk level. Each portfolio or ETFs information page also displays the assigned risk level for that investment.
The overall impact of these rules is similar to what happens on other platforms but we felt that some of the other platforms do a better job of highlighting the risk level of different portfolios and getting you in the right frame of mind as you invest.
Kristal.AI offers the lowest fees for mid-sized (S$50-500K) portfolios and it is the 2nd cheapest platform for larger portfolios.
Kristal.AI has a simple and low headline fee structure with 0 platform fees below US$10k in AUA and 0.30% for higher AUA. We add an estimated 0.20% avg. expense ratio for ETFs in the pre-built Kristal Portfolios and the 0.20% fees that needs to be paid for FX conversions (largely SGD to USD at the time of initial purchase or eventual sale) in our calculations. Finally there is the US$1 trading fee that is paid for every stock or ETF trade. These can add up quickly for top up investments and rebalances.
We simulated fees over 15 years in two scenarios – a one time investment that is sold at the end and a monthly recurring investment that is sold at the end. For portfolio between S$50-500K, Kristal.AI was the cheapest platform in both scenarios and the 2nd cheapest for larger portfolios. Smaller portfolios with recurring investment are not really feasible on Kristal.AI due to the large minimums. For one-time investments, Kristal.AI was still the cheapest platform including these trading charges.
Business Kristal.AI has a Capital Market Services License for Fund Management from the MAS. Their offices in Hong Kong and India are also regulated by SFC and SEBI respectively.
As a part of the process for approving the CMS license, MAS ensures that the officers of the company are “Fit and Proper”, have competency in core business areas such as fund management, risk management, operation and compliance. Licensees should also have adequate capital and processes in place to manage risk and compliance related issues.
They need to be audited internally on a regular basis and independently at least once a year. They must also ensure that customer assets are valued independently and reported accurately via a 3rd party or an in-house department that operates independently of the investment management function. The annual audit is supposed to additionally verify the independent valuation.
Most importantly the license requires Kristal.AI to keep customer assets segregated from their own assets and with an independent custodian so that they are protected and available to customers in the event of Kristal.AI going bankrupt or facing other difficulties.
Kristal.AI uses DBS for keeping clients’ cash. The stocks and ETFs are traded on Interactive Brokers and Saxo Capital Markets and custodied with HSBC and Citibank respectively.
Founder & CEO, Asheesh Chanda comes with experience in Investment Banking at JP Morgan and Citibank and also in fund management. Kristal.AI raised $6M from Chiratae Ventures and others in Jan 2020.
Portfolios Construction Kristal.AI appears to follow a somewhat different asset allocation strategy, with even the highest risk strategy (High Growth) allocating only ~70% to Equites, and the other portfolios in the 20-50% range. Instead they have larger allocations to commodities than most peers with a ~21% allocation in the All-Weather strategy and a ~14% allocation in the Growth strategy.
Within the equity allocation, the sector allocations are somewhat different from a passive style. In the Growth portfolio, for e.g., there is a big overweight in Tech and underweights in Financials, Utilities and Materials at the time of writing. Other sectors are largely in line with the benchmark. We were not able to compare country allocations as those were not disclosed by Kristal.AI but looking at the ETFs used to construct the equity portion of the portfolio, there seems to be a shift towards the US.
Kristal.AI also aims to generate alpha in its portfolios with active rebalancing and allocation. In other words its not a passive Robo but more of a actively managed portfolio driven by an AI based algorithm with human overlay.
Kristal.AI does not co-mingle your funds in an omnibus account like some other Robos. Instead your assets are kept in an account in your name with the custodians. Because of this they are unable to offer fractional share ownership. This is why the minimum investment amounts are large and differ by portfolio, because each portfolio has different mix of ETFs in it.
UI/UX The retail platform at Kristal.AI is not as polished at the best in class peers. We found the website and app to be somewhat slower than others and ran into a few problems as well. However finding and investing in a portfolio is largely intuitive and the problems were not critical.
Signing Up The onboarding process is largely smooth as you can create an account using your Google sign-on or another e-mail / phone number. Unlike some of the other platform, Kristal.AI only uses Singpass verification for the KYC process after account creation rather than during it.
Funding The account can be funded by PayNow or FAST. In our 2 rounds of tests, one month apart, the PayNow QR code did not work. We were able to complete the FAST transfer smoothly and we received confirmation in an hour or so. The funds were converted to USD and reflected in our account in about 24hrs. However, we couldn’t invest the funds right away and needed to mail the customer support to get that enabled. It wasn’t clear it this is always required or an exceptional issue but going by the message below, it does seem to be a known problem.
Investing in all products is simple. Each portfolio or ETF page has a Invest button. Click that, choose One Time or SIP (Systematic Investment Plan i.e. recurring option), indicate quantity, frequency etc. and place order. The orders are executed when the markets next open in US. We liked that Kristal.AI offers multiple frequencies (monthly, quarterly etc.) for recurring investments.
Kristal Portfolio You can click on a pre-built portfolio to get more information about it, such as minimum investment size, asset mix, details about the strategy etc. Click Invest, follow the simple instructions and you are done.
Advisory Algo The Advisory Algo is quite straightforward to run. You specify the amount to invest, the desired risk level and about 40 seconds later the algo recommends a portfolio. There are 4 risk levels – low, medium, high and very high. For a chosen risk level, the portfolios can be different each time the algo is run. The difference can be in the asset allocation as well as the ETFs used to construct the portfolio.
This can create some FOMO among the more kiasu people like me. Should I run the algo again to get a better portfolio? Or was the last portfolio better than this one? There is no way to save the portfolio designed in a run of the algo for later. You must invest in it when you see it or take a different portfolio the next time. In practice we saw relatively stable portfolios from run to run, with an occasional surprise.
ETFs There are 259 ETFs available to buy on the platform at the time of writing. You can filter those by asset class, geography, industry, risk level etc., select your preferred ETF and set up a one time or recurring investment.
However we were puzzled that there are different minimum quantity requirements for each ETF. So the S&P500 – IT Index needs a minimum investment of 97 units at a price of US$21 each at the time of writing, while the Health Care – Medical Devices ETF requires a minimum of 2 units at US$62 each. The US REIT Index only required 1 unit at US$110.
We were also surprised by some of the risk ratings assigned to ETFs. For instance both Digital Payments – Emerging Tech and Diversified High Dividend ETFs were classified as medium risk. We assume there is some algorithm behind these classifications but intuitively at least, those two seem to belong in different risk buckets.
Kristal.AI Private Wealth We did not review or compare the private wealth offering of Kristal.AI. However Private Wealth customers have access to select hedge funds, venture capital funds and unlisted companies among other options.
Customer Service We interacted with Kristal.AI’s customer service via e-mail, WhatsApp and phone. They were knowledgeable, helpful and proactive.
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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.
Robo-Advisors in Singapore had a mixed 1H2022. Their Flagship portfolios outperformed while Thematic portfolios bombed.
