I last updated the performances of the portfolios of popular Robo-advisers in Singapore nine months 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 an excellent time to see how they stack up. So here is a comparison of how these different portfolios performed for these 2.4 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 what the performances were like at that point, and my commentary:
- First portfolio performance update
- Second portfolio performance update
- Third 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 portfolio 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:
- MoneyOwl’s Equity Portfolio: 100% Equity in Dimensional Funds, which are tilted towards value, small and profitability factors.
- 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). Since then, they have increased their allocation to Dimensional Global Core Equity recently and replaced the Infinity 500 with the Amundi Prime USA fund.
- 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%.
- 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.
- 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.
- 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.
- IWDA: This is a London-listed, Irish domiciled UCITS ETF that tracks the MSCI World Index. Very popular among DIY Investors. ETF page here.
- 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.
- 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 3.73% between 27 Jul 2020 to 30 Dec 2022. This depreciation is annualized to -1.55% a year. So I would need to personally adjust the results of the IWDA, AGGU and Global Balanced Index portfolio with this currency change.
How did the Singapore Robo Advisers Portfolios perform during the past 887 Days?
The portfolios’ tracking period starts from 14 July 2020 to 31 Dec 2022. That spans 887 days or 2.4 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 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:
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%. It also means if you sell on 6th Feb 2021, you will earn net-net a 14.78% a year return. Thus, each point on the chart shows the annualized returns if you sell it.
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:
- MoneyOwl’s Equity Portfolio: 7.2%
- EndowUS’s Very Aggressive Portfolio: 6.4%
- IWDA: 5.3% (adjusted for currency an annualized -1.55% depreciation)
- Syfe Equity 100: 1.7%
- Balanced Portfolio: 0.8% (adjusted for currency)
- Syfe Global ARI/Equity 100: -2.5%
- StashAway’s 36.0% Risk Portfolio: -3.9%
- AGGU:-6.6% (adjusted for currency)
- Syfe REIT portfolio with Risk Management: -11.8%
These are the notable change in rank since the last post about six months ago:
- Endowus overtakes the IWDA to move into second place
- Syfe Equity100 retook its spot from Balanced Portfolio
- AGGU did better than Syfe REIT to move into last second place
The following table gives an end-of-the-month view on the evolving performance of the portfolios:
Note that the table above does not show month-by-month returns but how the XIRR evolves over the months.
2022 Full Calendar Year Returns
Some may be interested to see how well the portfolios did in 2022.
Here are the portfolio returns in 2022:
- MoneyOwl’s Equity Portfolio: -15.8
- EndowUS’s Very Aggressive Portfolio: -16.9
- IWDA: -16.1% (adjusted for currency a 0.4% depreciation)
- Syfe Equity 100: -17.3%
- Balanced Portfolio: -16.4% (adjusted for currency)
- Syfe Global ARI/Equity 100: -18.8%
- StashAway’s 36.0% Risk Portfolio: -16.6%
- AGGU:-12.0% (adjusted for currency)
- Syfe REIT portfolio with Risk Management: -25%
Here are some comments.
The Right Way to Look At Portfolio 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 one 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 that 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:
- Why are the portfolios constructed this way, how are they constructed, and how do they give you the best chance to capture the most significant 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 understand their strategy and believe in it for the long term.
- 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 well because they are not easy to execute in real life or cost a lot.
- 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, and 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 respectably even against a pure MSCI World ETF like the IWDA.
Interpreting the Portfolio Performances
2022 has been a challenging year for both equities and bonds.
In general, only energy stocks do well, but if you have overweight defensive sectors such as utilities and healthcare, you would have done better. If you have been in very short-term treasuries and less to stocks or bonds, you would perform better as well.
This means that if your portfolio has a combination of a strategic and tactical philosophy, and you are worth your salt, you would have done well.
For the 2.4 years, Endowus and MoneyOwl’s portfolios continue to do well. Their tilt towards value has helped the portfolio outperform the IWDA, which is an ETF proxy to MSCI World.
These two are strategic portfolios that do not shift around much. Endowus had some strategic changes to the funds and allocations. Generally, both include emerging markets, which have been challenging these couple of years so that balances out the outperformance of value.
Excluding their access fee, they do have a higher total expense ratio compared to the IWDA and this performance is net of fees. So if they are outperforming over these 2.4 years, I think it is a very good result.
Stashaway, Syfe Equity100 and ARI+Equity100’s performances should be evaluated in the same bracket as the three leaders but their performance has continued to lag.
A volatile 2020, followed by a bullish 2021, and then a bearish 2022 should present an ideal environment for portfolios with tactical tilts (Stashaway), and portfolios that advertise that they can do factor timing well (Syfe Equity100) to showcase their formula.
Unfortunately, they have failed to do that.
Unless they do something dramatically different from the MSCI World index, and that allocation proved successful, it is getting very difficult for them to catch up with both Endowus and MoneyOwl’s results.
The poorest performance was reserved for Syfe REIT with Risk Management portfolio. The bond allocation to ABF Bond fund should help the portfolio cushion the volatility to equities, but during a period where the bond yield was at a historical low, the bond allocation also took a beating.
Investors who had invested in a balanced portfolio like the one we have in our comparison would have gone through one of the worst five 60/40 portfolio returns.
The 2022 calendar year returns look closer. IWDA did the best, follow by MoneyOwl and then Stashaway. Most of the returns look quite close.
The tactical allocation for Equity100 and Stashaway did not save them from the drawdown in any way. Bonds suffered the worse drawdown in fifty years and so AGGU didn’t do well.
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:
- MoneyOwl portfolio – 7.2%
- Endowus portfolio – 6.4%
- IWDA (MSCI World Index ETF) – 5.3%
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 toward the smaller and cheaper companies.
Fund managers in a unit trust, these Robo advisers portfolios, you and I are just trying to capture as much:
- The returns for taking the risk above a risk-free bond.
- 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 somewhat 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.
Related: Intro to Smart Beta Passive Investing for Singaporeans
You can easily invest in low-cost, Irish-domiciled factor ETFs on the London stock exchange. Geographically, they expose you to MSCI World, MSCI Europe, MSCI USA and some MSCI Emerging markets.
But for today’s comparison, we will focus on the ETFs that target factor premiums within the MSCI World.
Here is the performance, adjusted by currency to 31st December 2022:
|ETF||Factor||XIRR Return (adjusted for Currency)|
|iShares Edge MSCI World Multifactor UCITS ETF (IFSW)||Value, Size, Quality, Momentum||5.6%|
|iShares Edge MSCI World Momentum Factor UCITS ETF (IWMO)||Momentum||1.9%|
|iShares Edge MSCI World Value Factor UCITS ETF (IWVL)||Value||8.3%|
|iShares Edge MSCI World Minimum Volatility UCITS ETF (MVOL)||Minimum Volatility||2.1%|
|iShares Edge MSCI World Size Factor UCITS ETF (IWSZ)||Size||3.1%|
|iShares Edge MSCI World Quality UCITS ETF (IWQU)||Quality||4.8%|
By looking at the corresponding performances of these Smart Beta ETFs, we can see which factors did well and which struggled.
The Value factor ETF did the best, followed by the Multifactor ETF, then Quality. Only the Multifactor and Value Factor ETF managed to beat the benchmark index of 5.3% a year (after adjusting for currency).
It is pretty consistent in that the factors which managed to screen out commodities, cyclical companies and financial companies and less expensive sectors did better.
Interestingly, the World Momentum ETF started off being the best performer emerging from the pandemic, with the World Minimum Volatility ETF struggling the most. 2.4 years on, the Minimum Volatility ETF ended up being the better performer.
For the third review in a row, the iShares Edge MSCI World Multifactor UCITS ETF (5.6%) did vastly poorer than the Dimensional Global Core equity fund (7.9% XIRR). These funds are probably trying to do the same thing, tapping the same geographical region. 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.
There will likely be years where the iShares ETF did better and some years the Global Core did better. The difference is pretty big, though.
Both Endowus and MoneyOwl’s portfolios did better than the Multifactor ETF, which shows the quality in their portfolio construction.
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.
2.4 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.
If you wish to sign up with MoneyOwl or Endowus, I do have the promo codes here.
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 MoneyOwl referral link: My MoneyOwl Referral Promo Code Link
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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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Wednesday 1st of February 2023
Stashaway did a few wrong calls that they should not have done as a roboadvisor, like investing in China tech in 2020 and divesting one year and a half later at a huge loss. I feel they behaved like a mutual fund instead of following the global equity portfolio, and they lost their very risky bet to the detriment of their clients (-5% end of 2021 when the rest of the crowd was at +30%). I feel these roboadvisors should be more transparent about their portfolios exposure and whenever they do such arbitrage they should leave the option to investors to follow or not. When I see your graph comparing performances, I am not surprised anymore that even doing dollar averaging my portfolio was always increasing its losses. The yearly 0.6-0.8% fees are also outrageous for the sector when American equivalent are proposing 0.1-0.4%.
Sunday 12th of March 2023
Hi Rich, sorry to hear about that.
One thing we need to note is that these are strategic portfolios that encompass the ideas of the robo. When you invest, you need to sort of agree with that philosophy or you need a way to know that this strategy works out over time.
The manager has a responsibility to give you an attribution for why the performance is not so good. For example, in the recent month, at my work place Providend, we will be able to update all the advisers that the bond funds is not performing as well as the index because of the exposure of the short duration bonds because they just happen to be too long, or lack of exposure to these few countries, as compare to the index.
If you are looking for an adviser, this is some updates that you can request, so that you can make an educated and fair assessment. They have a role to clarify your doubts.
I am not sure if it is a wrong call, but that is up to them. Even for our funds, they also made calls to reduce Russian holdings over time. Not sure if it is the right call but we want them to be systematic about it.
Hope this helps.
Monday 16th of January 2023
Are you worried about your USD exposure? Given USDSGD declined 5% in 6 months and may decline more.
All the London-listed global equity and US stock etfs are in USD. I checked Dimensional Global Equity SGD vs the USD fund and the SGD fund underperformed by 2-3%, probably due to USDSGD FX hedges. So Dimensional SGD funds are hedged and will also suffer losses due to USD decline. On top of that it has additional layer of fees every year to the platform, eg Endowus.
How to solve this FX problem?
Tuesday 17th of January 2023
Hmm... VWRA, IWRD, and SPY are all in USD as well. When selling and leaving the USD in IBKR, do you leave the cash in USD, or convert to SGD? But conversion makes no sense because you have to convert again into USD to buy back.
What do you do with all your USD exposure? I think my equity portfolio is 90% denominated in USD.
Of course, we can't tell where USD will be in 20 years. Which is our holding time frame!
Tuesday 17th of January 2023
HI Aaron, the equity funds are not hedged. they are USD denominated. At work we have both the USD and SGD portfolio. The SGD portfolios looked like they gain a lot when USD went up. But end of the year they look no different from the USD portfolio because the currency depreciated.
If we have a Turkish lira share class the returns of the JPGL or the Dimensional one will be to the moon because of the USD strengthening.
But the question is what is the right way to look at it?
Perhaps being in Singapore colored our lens. If we are living in Malaysia, some would say given all this, it is still better to be denominated in USD because the ringgit is so poor!
As I think about this, I do think that it will be a worry if a weaken USD does not benefit the companies. There is a strong relationship between a weak USD and better emerging market, gold, and even stock performance. If we don't benefit from a weaken USD, then that might be a problem.
Sunday 15th of January 2023
Hi Kyith, I follow your site to get quite an interesting insights on investing. Appreciate you sharing your thoughts. 👍 Any reason for not including Autowealth in these comparisons - or you feel their return would be very close to 60/40 or 80/20 type portfolios, so not really much difference?
Tuesday 17th of January 2023
HI Raul, no particular reason. I think it is a chore to keep track of their portfolios back in 2020, so I just didn't include that. It is not because I don't like their investments or anything like that.
Sunday 15th of January 2023
Does injecting more capital into robo advisors (that automatically rebalance to stay within the selected allocation) while they are in the red 'average down' the same way if you were buying more units of a single stock?
Or is there a scenario you lose both dollar value and also total unit holdings because of the rebalancing?
Tuesday 17th of January 2023
i think the effect of rebalancing in a equity and bond portfolio to gain performance improvement is less. IT does more to bring the portfolio back to an allocation that is closer to your true risk appetite. Adding more capital in the red helps because long term these portfolios should go up and you get better prices.