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The rise of robo-advisors is apparent not just in Singapore, but also in many other countries globally such as USA and Canada.
Here in Singapore, investors have more than 10 different robo-advisors to choose from. Two prominent robo-advisory platforms known by many are AutoWealth and StashAway, which were amongst the first in the field. Other FinTech companies competing in the robo-advisory field include Endowus, FSM MAPS and MoneyOwl. You can read up more about what these companies by following the respective links.
The latest entrant, Syfe, was just launched in July 2019. Here are 5 things you need to know about Syfe before investing with them.
#1 Syfe – The Latest Entrant To Singapore’s Robo-Advisory Space
Syfe is a digital wealth manager that launched in Singapore in July 2019 after raising $5.2 million in seed funding, led by UK-based venture capital fund Unbound. Syfe also received the capital markets services (CMS) license from the Monetary Authority of Singapore.
Syfe was founded by Dhruv Arora, who was previously a Portfolio Trader at UBS Hong Kong and went on to become a Director and lead UBS’s ETF efforts in the region. Since 2018, Syfe has been building a platform that will appeal to passive investors, enabling their customers to grow their savings through an automated platform that is both easy to use and affordable.
#2 A Risk-Managed Passive Investing Approach
The cornerstone of Syfe’s methodology is to manage risks first over returns.
Syfe focuses on risk management to provide investors with customised investment portfolios based on their individual risk profiles, rather than focusing on returns. This means that Syfe optimises returns while maintaining your selected level of risk, so you enjoy better risk-adjusted returns across all market conditions.
Your portfolio is determined by your downside risk. This downside risk represents the maximum amount of money you can potentially lose. This downside risk can be changed anytime. For example, perhaps your downside risk is 15% today, but you discover that you have a kid coming along and decide that you want to lower this downside risk to 10%. This can be done easily on the platform, which will result in your portfolio possibly being rebalanced.
Syfe uses Automated Risk-managed Investments (ARI) strategy, their proprietary investment methodology, which combines two leading approaches – Global Market Portfolio (GMP) and Risk Parity Portfolio (RP). ARI automatically adjusts your portfolio to ensure enhanced risk-adjusted returns by managing your portfolio’s downside risk, which is based on stress testing across the last 15 years.
You can find out more about how ARI works here.
#3 An Investment Portfolio Built With Exchange-Traded Funds (ETFs)
When you invest with Syfe, your portfolio is built using Exchange-Traded Funds (ETFs) that are globally diversified across asset classes, sectors and geographies. ETFs have become a popular investment vehicle over the past few years. ETFs give you diversification into many different companies even with a relatively small investment amount.
The asset allocation is determined using the ARI algorithm which monitors your portfolio and rebalances when necessary to keep your portfolio risk aligned with your risk appetite.
A quick test on Syfe shows that your portfolio with Syfe will comprise of more than 20 ETFs. Syfe selects ETFs that are liquid, with low expense ratios to minimise costs and maximise returns. Currently, Syfe only invests your money into ETFs that are listed on the US stock exchange. This also means that Singapore listed securities are not amongst their product offerings.
For non-U.S. tax residents, dividends and bond coupons for certain ETFs will be subjected to a withholding tax of 30% under U.S. Internal Revenue Service (IRS) regulations.
#4 What Are The Fees Involved?
You cannot control your portfolio’s performance, but you can control the fees you pay.
No matter what type of investment you make, all investments come with some form of cost or fee, such as transaction costs, management fees and administrative charges. However, what’s important is to keep these costs low as they inevitably eat into your investment returns.
Investors these days have a wealth of resources available online, allowing them to read up on the types of investments available as well as the fees incurred. With numerous fintech companies being able to provide their investors with low fees, to effectively compete in the robo-advisory space, offering competitively low fees is important.
Syfe charges 0.65% per year on your invested amount. This 0.65% all-inclusive fee gives you unlimited, free withdrawals and unlimited rebalancing. This fee is calculated on a daily basis and billed at the end of each month. Should you withdraw your balance before the end of the month, you pay only for the days your money was managed by Syfe.
Syfe does not charge transaction or brokerage fees. However, there are other fees and charges apart from Syfe’s 0.65% per year fees to take note of. This includes:
- Securities and Exchange Commission (SEC) fees of 0.0013% when selling (charged by SEC)
- ETF Management Fees reflected in the prices of your ETFs average to about 0.15% (charged by the ETF manager)
- Currency conversion charge at 0.05% on the amount converted (charged by Broker, SAXO)
#5 Funding Your Syfe Account
When you invest with Syfe, you can have multiple portfolios and multiple goals. However, you cannot invest using your Supplementary Retirement Scheme (SRS) or Central Provident Fund (CPF) accounts.
You can fund your Syfe account in both Singapore Dollar (SGD) and U.S. Dollar (USD). You can also top up your Syfe account anytime and the funds will automatically be invested the next day. Funds in your Syfe account are held in a Trust Account in DBS Bank while your investments are held in a Custodian Account through Saxo Capital Markets.
To open an account with Syfe, you will first be tasked to complete your risk profile. Through this risk profiling, Syfe will also get a better understanding of your investment objective, financial situation, investment expertise, how much you need to achieve your goal and most importantly, your downside risk.
There is no minimum amount for investors to start investing with Syfe. There is also no minimum holding or lock in periods for investing with Syfe. This means that you can withdraw your funds at any time with no withdrawal fees charged.
Just like investing with any other robo-advisor, look out for promotions that the robo-advisor is running.
Special Promotion By Syfe: Get $10 added to your portfolio for every $1,000 invested with Syfe, up to a maximum bonus of $100. This bonus will be credited within 7 days after receiving your funds and invested together with your portfolio.To enjoy this promotion, you will need to maintain the portfolio with Syfe for at least 3 months. You can read more details on the promotion here.
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