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Comparing the Performance of Some Singapore Robo Advisers (2022 Update 1.7 Years Later)

I last updated the performances of the portfolios of popular Robo-advisers in Singapore half a year ago.

I started tracking these portfolios roughly around 14 July 2020 when I started with them.

A few readers asked whether there will be an update and I thought half a year is a good time to see how they stack up. So here is a comparison of how these different portfolios performed for these 1.7 years.

I would also compare them to some low-cost Smart Beta ETF portfolios just because I am interested in it.

Some of you may be interested to read the last two reviews to see how the performances were like at that point, and my commentary:

  1. First portfolio performance update
  2. Second portfolio performance update

The Singapore Robo Advisors Portfolio That I Tracked

I wanted to have a certain sense of how some of those portfolios were performing.

I also wanted to see some of the unique portfolios feature certain Robo Advisers advertise at work.

I chose the highest-risk portfolios for the portfolios where available.

I would also include a couple of ETFs that tracked the MSCI World and Bloomberg Barclays Global Aggregate Bond Index.

So here are the portfolios I tracked:

  1. MoneyOwl’s Equity Portfolio: 100% Equity in Dimensional Funds, which are tilted towards value, small and profitability factors.
  2. Endowus’s Very Aggressive Portfolio: 100% Equity that was all in Dimensional before they moved a sizable to Infinity 500 (which is an index tracker with S&P 500)
  3. StashAway’s 36.0% Risk Portfolio: This is their most aggressive portfolio based on ERAA® (Economic Regime-based Asset Allocation). If I understand this regime based asset allocation, the correlation of asset classes will keep changing, so Stashaway has a way of adjusting their allocation so that they can risk-weight the portfolio with different instruments so that you can capture the return and only take a max downside of 36%.
  4. Syfe Global ARI (Equity 100 since 30 Aug 2021): Syfe’s risk parity solution. A mixture of equity, bonds and gold. When the volatility rises, the portfolio should go to bonds and gold and when risk subsides, the portfolio should go back to equity. This should give you a smoother experience. I have selected the option where the portfolio will be risk manage for me. In August 2021, Syfe decided to remove their ARI portfolio, not sure if its due to poor performance or whether it does not work and replaced them with the Syfe Core portfolio. So for my portfolio, they rebalanced the ARI to the Equity100 portfolio, which I am also tracking. I still continue to track, so as to let you see whether things return to where it should. You can read more about it here.
  5. Syfe REIT portfolio with Risk Management: I realized that I have totally misinterpreted this portfolio. I chose a portfolio that incorporates REITs with government bonds. The portfolio is not smart enough to mitigate the downside volatility during volatile times and step up its REIT allocation when the coast is clear. So what we have here is a half bond half REIT allocation.
  6. Syfe Equity 100: The fabled Smart Beta portfolio that can time the factors so that they can capture the factor premiums when they appear and disappear. You can read more about my initial thoughts of the Equity 100 portfolio here and my thoughts about its performances here.
  7. IWDA: This is a London-listed, Irish domiciled UCITS ETF that tracks the MSCI World Index. Very popular among DIY Investors. ETF page here.
  8. AGGU: This is a London-listed, Irish domiciled UCITS ETF that tracks the Bloomberg Barclays Global Bond Index. Not so popular among DIY Investors due to investors aversion to bonds. Investment-grade corporate bonds of an average 7.4 years duration. ETF page here.
  9. A Global Balanced Index Portfolio: I added this portfolio in this post as it will be good to see how a portfolio more suitable for a more risk-averse investor would do. 60% made up of IWDA and 40% made up of AGGU. Standard deviation (portfolio volatility) would be closer to 10%. Based on historical data, 68% of the historical annual compounded returns will fall between -3, -4% to +17, +18%.

#1 to #6 are in SGD while #7 to #9 is in USD. USD have weakened against SGD by 1.12% between 27 Jul 2020 to 17 Mar 2022, So I would need to personally adjust the results.

How did the Singapore Robo Advisers Portfolios perform during the past 607 Days?

The tracking period of the portfolios starts somewhere from 14 July 2020 to 17 March 2022. That is a span of 607 days or 1.69 years.

We measure the performance by tracking their money-weighted return as we hold the portfolio over time with the XIRR.

XIRR is like finding out the annual compounded “interest yield” on a stream of uneven cash flows. It is good to measure how your investment is doing if there is a lot of cash flow deployed and you got dividend income and sales here and there.

A better way to measure here would be time-weighted return or TWRR for short.

But because I am not adding any additional capital XIRR is almost equal to TWRR. You can read my post Comparing Money-Weighted Returns Versus Time-Weighted Returns to know more about the intricate difference between the two.

The chart below shows the XIRR for each of these portfolios over time:

Click to view a larger chart

Each point on this chart measures the XIRR of the portfolio at a particular point.

For example, if the XIRR plotted for Syfe Equity 100 on the 6th of Feb is 14.78%, it means from the start of 20th July 2020 to 6th Feb 2021, the “interest rate earned” is an annualized 14.78%.

XIRR in this case is an annualized compounded return.

The portfolios ended with the following returns, ranging from the highest in the chart above to the lowest:

  1. MoneyOwl’s Equity Portfolio: 19.2%
  2. IWDA: 17.9% (adjusted for currency an annualized -0.66% depreciation)
  3. Endowus’s Very Aggressive Portfolio: 17.7%
  4. Balanced Portfolio: 9.7% (adjusted for currency)
  5. Syfe Equity 100: 8.8%
  6. Syfe Global ARI/Equity 100: 3.0%
  7. StashAway’s 36.0% Risk Portfolio: 1.3%
  8. Syfe REIT portfolio with Risk Management: -3.6%
  9. AGGU:-3.6% (adjusted for currency)

These are the notable change in rank since the last post about six months ago:

  1. IWDA take second, relegating Endowus to third but the difference is not too big.
  2. Balance Port overtakes Syfe Equity 100

The following table gives an end-of-the-month view on the evolving performance of the portfolios:

Click to view a larger table.

Note that the table above does not show month by month returns but how the XIRR evolves over the months.

Here are some comments.

The Right Way to Look At The Returns Here

We have all been to school.

Basing your decision to invest in a particular Robo adviser based on such a short time frame is almost equivalent to judging your academic amplitude during your Primary 1 days.

It is almost laughable.

Tracking these performances is to have a basis for qualitative evaluation.

Performance data can be a fudge by taking a period where it looks very favourable to you. And leaving out periods that you underperform.

Your financial advisers, financial planners, investment professionals, the sales managers may be guilty of doing this.

Some strategic portfolio allocation needs a long time to see it shine. Unfortunately, we do not have time but that is one of the main challenges in investing.

You should choose to invest based upon:

  1. Why the portfolios are constructed this way, how are the portfolios are constructed, and how do they give you the best chance to capture the greatest portfolio returns over the long run. This means that you need to understand what the Robo advisers are doing. By investing in them, you are saying you understood their strategy, believe in that strategy for the long term.
  2. The execution of their strategy. It is good to talk about a good game, it is totally different when it comes to execution. Some strategies do not work so well because they are not easy to execute in real life or cost a lot to execute.
  3. Which portfolios will suit your risk profile. Some of the portfolios above are constructed to give lower volatility (Syfe ARI, Syfe REIT with Risk Management, Stashaway 36% portfolio to a certain extend.). The Robo advisers are balancing returns with volatility and you should not evaluate your suitability purely only on returns.

Grouping the Evaluation of the Singapore Robo Portfolios

MoneyOwl’s Equity, Endowus’s Very Aggressive Portfolio, Stashaway’s 36% Risk Portfolio, Syfe Equity 100 portfolio should be compared as the same animals with IWDA.

Syfe REIT and Global ARI should be more boutique solutions. Both should be evaluated against the Balanced 60/40 portfolio as the risk level is about the same.

The AGGU is to give us a sense of how the low-volatile bond-like returns are. Historically, the AGGU would do VERY respectable even against a pure MSCI World ETF like the IWDA.

Interpreting the Performances of the Portfolio

2021 have been a rather good year if your portfolio is invested in Large Cap Developed Market stocks. The interest rate was low but at the tail end of 2021 and the start of 2022, the inflation narrative became very strong and the interest rate has shot up in a big way.

China Technology Stocks have had a challenging 2021 and the start of 2022 have not been easy as well.

The rising interest rate provided a headwind for bond performance.

After a strong showing at the tail end of 2020 and the start of 2021, Small Cap stocks have stalled.

Commodities and Energy did well at the tail end of 2021 and the start of 2022.

In terms of factor styles, value and quality or profitability have done better than the equal-weight, small-cap, momentum factors.

These factors will affect your portfolios depending on your exposure.

Why AGGU and Syfe REIT with Risk Management Suffered

Since peaking in early December 2021, prices on bonds have been trending downwards and since AGGU tracks the Bloomberg Barclays Global Aggregate Bond Index, which is a bond index of at least investment-grade bonds and intermediate-term duration, it will suffer.

Rising interest rate is not good for REITs or bonds, which are the main components of the Syfe REIT with risk management.

The Struggles of Stashaway

Stashaway runs a rather active, black-box strategy that in their communication should give you a better risk-adjusted return. This means a large part of the strategy involves some ways to identify market regimes, and positioning well for them.

The narrative of their investment philosophy can be confusing for some because they tried to put words like passive and then also active which can be a bit confusing.

Here is the active positioning of their portfolio announced in Jan 2022:

Valuation of sectors and regions seem to be a big feature in their strategy. Since the previous rebalancing in Jul 2021, they have opted to increase their allocation to China Internet Sector to as much as 20% of the portfolio as the China Internet Sector melted down further.

Then on 14 March, after another round of FUD on China companies, Stashaway announced this:

Stashaway, after being comfortable with the uncertainty over China companies both domestically and internationally for a long while, decided to minimize their exposure to the China Internet Sector by selling off their China Internet ETF KWEB, bringing the allocation to zero here:

They probably marked the bottom in the market potentially shortly before the Chinese government came out and reassure the capital markets. The markets subsequently rebounded 59% from that low.

So the Stashaway investors took the plunge, missed out on the upside, on about 16% of their portfolio (or was it 13%, cannot remember).

Stashaway have positioned well in energy, financial services, precious metals well before they started doing well but perhaps the size of their China internet positioning, and the volatility killed the performance.

Syfe Equity 100

Syfe Equity 100 supposedly should contain Syfe’s best investment ideas. This is their flagship 100% equity strategy, based upon Smart Beta, positioned around the following factors: growth & value, volatility and country exposure.

It is one of the confusing factor strategies out there in that, you seldom hear people talk about country exposure as a factor.

The strategy behind how they implement Smart Beta is very opaque. In fact, in my time as an investor, I cannot recall a piece explaining the philosophy behind how its implemented.

So what you get currently is a 100% equity fund, underperforming even a generic 60% Equity 40% Bond fund, let alone equivalent 100% equity peers.

One of the selling point articulated to me when Equity 100 was launched was that Syfe is able to time the factors, which means be able to identify the premium in the factor appearing before and successfully get their investors into it.

Value has gone on a pretty good run and growth have been suffering, and as an investor in the fund, you got to ask yourself: Have they actually successfully captured the premium by overweighting the factors that work in the past 1.7 years?

If they had, a 100% equity strategy should at least keep up with IWDA, MoneyOwl and Endowus’s portfolio.

But its performance is half of IWDA.

Perhaps they failed to capture the right metrics that identify the shifts and you should give them more time. Sometimes, you can have ideas that are academic and look to work, but in actual implementation, it can prove challenging.

Something for those heavy in Equity 100 to think about.

Endowus and MoneyOwl

Nothing surprising about their performance.

Both portfolios largely held Dimensional Funds where most of the weights are on Large Cap stocks, geographically well-diversified, but overweight on those that are cheaper, smaller and more profitable.

The great thing about investing in these Smart Beta funds that have a very clear investment philosophy is that you know what you will get: those three factors.

If value underperforms for a long period or smaller companies don’t do well for a long period, you know these Dimensional-based portfolios will struggle.

The link between what you see in the market from the factor perspective will largely be expressed in your portfolio.

There are fewer questions such as “Why are the funds performing like that huh?” and it replaced more like “How are value and smaller companies going to do going forward?”.

If you would like to find out more about Dimensional Fund Advisers, which forms the basis of Endowus and MoneyOwl’s flagship portfolios, you can read my comprehensive introduction to Dimensional Fund Advisers here.

Comparing the Robo Advisers Portfolios to Low-Cost Global Smart Beta ETFs

So we know that some of the better performers were:

  1. MoneyOwl portfolio – 19.2%
  2. Endowus portfolio – 17.7%
  3. IWDA (MSCI World Index ETF) – 17.9%

MoneyOwl and Endowus’s portfolio is tilted towards the small, profitability and value premium.

Based on the funds used, the way to look at them is not that they are very tilted towards smaller and cheaper companies but within the larger-cap space, they tend to lean to the smaller and cheaper companies.

At the end of the day, fund managers in a unit trust, these Robo advisers portfolios, you and me are just trying to capture as much:

  1. The returns for taking the risk above a risk-free bond.
  2. Different factors/risk premia/risks that historically show us that they will reward us for taking those risks.

All three portfolios are very globally diversified and thus they aim to capture market returns.

Thus, their performance looks rather similar. Except that perhaps MoneyOwl’s portfolio is most factor-tilted, thus the performance is better.

I thought it a good idea to check their performance against quantitative low-cost Smart Beta ETFs which capture different factors.

RelatedIntro to Smart Beta Passive Investing for Singaporeans

On the London stock exchange, you can invest in low-cost, Irish-domiciled factor ETFs easily. Geographically, they give you exposure to MSCI World, MSCI Europe, MSCI USA and some MSCI Emerging markets.

But for today’s comparison, we will focus on the ETFs that targets factor premiums within the MSCI World.

Here is the performance, adjusted by currency to 17 March 2022:

ETFFactorXIRR Return (adjusted for Currency)
iShares Edge MSCI World Multifactor UCITS ETFValue, Size, Quality, Momentum17.2%
iShares Edge MSCI World Momentum Factor UCITS ETFMomentum10.7%
iShares Edge MSCI World Value Factor UCITS ETFValue19.3%
iShares Edge MSCI World Minimum Volatility UCITS ETFMinimum Volatility8.2%
iShares Edge MSCI World Size Factor UCITS ETFSize14.8%
iShares Edge MSCI World Quality UCITS ETFQuality16.3%
iShares MSCI World Quality Dividend UCITS ETFDividend11.8%
Performance of Low-Cost Factor Funds Listed on the London Stock Exchange Domiciled in Ireland

By looking at the corresponding performances of these Smart Beta ETFs, we are able to see which factors did well and which struggled.

The Value factor ETF did the best followed by the Multifactor ETF, then Quality.

It is quite consistent in that the factors which managed to screen out commodities, cyclical companies and financial companies and less expensive sectors did better.

For the second review in a row, the iShares Edge MSCI World Multifactor UCITS ETF (17.2%) did poorer than the Dimensional Global Core equity fund (20.6% XIRR). These are probably the funds that are trying to do the same thing, tapping the same geographical region. I think the main difference may be that the iShares ETF is more tilted towards momentum than the Dimensional implementation as Dimensional implements momentum more on their trading execution instead of using that factor as an additional ranking layer.

More than likely, there will be years where the iShares ETF did better and there will be some years the Global Core did better.

Both Endowus and MoneyOwl’s portfolios did better than the Multifactor ETF, which shows the quality in their portfolio construction in a way.

Comparing against Providend’s Strategic Portfolios

Lastly, a short word for the colleagues at Providend who reads this (so that I do not have to do double work and get to enjoy my weekend).

We run two strategic portfolios at Providend. One is index focus which tries to capture market risk. The other is an enhanced index portfolio tilted towards small, value, and profitability.

Each portfolio has different risk levels. They are not too different from what you see at MoneyOwl and Endowus.

This time around, I only managed to compute the return of the enhanced index portfolio.

Our equivalent 100% equity portfolio did 20.95% XIRR during this period, which is luckily better than most of the portfolio. Again, perhaps the biggest difference is the presence of a little allocation to Dimensional Global Targeted Value, which alone did 32.1% XIRR during this period.

Last Word

Investing in these portfolios is supposed to be a long term endeavour.

These portfolios are constructed for you to benefit as an alternative, volatile, savings vehicle for money that you will not need to touch for a few years.

Performance should be reviewed perhaps after 10 years. My colleague told me Professor Robert Merton said the minimum period to see if a manager has the ability to deliver an edge is more than 20 years.

A good portfolio that beat everyone for 5 years might just be lucky.

1.7 years is a very short time frame to evaluate performance upon, but if we select a disastrous portfolio that is poorly constructed, we unwind time to correct our mistakes.

So how do we evaluate if 10 years of historical performance is too short for us to evaluate?

Perhaps the focus is more on what is the thought process behind how the portfolio is constructed and whether there are empirical evidence showing why that will work out in the long term.

I don’t have many promo/referral codes if you wish to sign up for any of the Robo providers here except for MoneyOwl.

The most cost-efficient way to invest in those Smart Beta, London-listed, Irish Domiciled ETFs is to invest through Interactive Brokers.

Here is my referral link: My MoneyOwl Referral Promo Code Link

If you use my referral code to sign up for their services, you will be able to get $60 worth of GrabFood credits.

If you sign up for comprehensive financial planning, insurance or investment portfolio individually, you will be able to get S$20 GrabFood credits each. Or if you sign up for all, you will be able to get S$60 in total.

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Revhappy

Friday 25th of March 2022

Brilliant writeup, Kyith! This is my conclusion after reading the performance of the Robos: Whereever possible DO NOT give any opportunity to any local active management. Here by local, I mean the advisors at Syfe and Stashaway. The local advisors are pretty low on intellect/talent/execution and heavily biased towards Asia and China. We can see this the way FSM and UOB fund managers/advisors have always been favorable towards Asia and China and been so wrong since 2010. This is called home country/familiarity bias, which is really doomsday for everyone who listened to these people and invested in Asia heavy portfolios for the last decade. They have always been calling US overvalued and got it so wrong, yet havent learnt any lessons.

So conclusion, if you see a local fund manager/advisor, runaway as far as possible. So that leaves us with only global fund manager who have a global perspective. So the best way to play this is choose Endowus Dimensional Global core equity fund as a single fund portfolio, so you save on the access fee. This is the only single fund you need for your equity allocation. For the bond allocation one of the Endowus Cash smart funds including ultra will be okay, inspite of the volatility. You can topup any excess cash you have to the Endowus cash smart fund and treat it as your cash buffer and then setup a recurring monthly transfer from the cash smart fund to the dimensional fund portfolio and you have your perfect automated DCA solution :) This is all you need.

Cheers! Revhappy

AB

Tuesday 26th of April 2022

LOL

Kyith

Sunday 27th of March 2022

I think you are making the wrong conclusions from this.

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