Profitable investing is all about spotting trends. These can be in terms of predicting market prices or in terms of picking up on new ways of getting exposure to the financial markets. An example of the latter is robo advisors, which first came to the market in 2006.
The technology associated with robo advisors has moved on a lot from that time and fine-tuned the ways they offer automated trading to their clients. Investment management decisions are largely based on algorithms that scour the markets looking for opportunities. Investors create a profile based on investment aims and the online platform does the rest. There’s only a small amount of human intervention and the hands-off approach is proving increasingly popular.
Robo advisors are forecast to grow to have assets under management of $1.5m this year, with the average account size of users being $11,430. The number of account holders using robo advisors is predicted to rise to 206,100 by 2025.
These growth forecasts are a sure sign that Singapore robo advisors are attracting a lot of attention. With the sector increasing its AUM at a current rate of 17.47% per year, it’s time to consider which of the best robo advisors in Singapore are the best fit for you.
Robo advisory is a natural fit for this broker, which has a wealth management pedigree
Simple functionality, very user-friendly
Free demo account to try out robo advisory investing
Webinar and other educational materials to guide investors
Uses algorithms based on the firm’s award-winning Swissquote Quant Fund
Well-regulated broker with stringent customer trust and safety practices
No inactivity fees
Strong brand and global reputation
Swissquote’s robo advisory service has grown out of the company’s highly successful and long-established wealth management service. The Swissquote robo advisor’s algorithms are based on those of the Swissquote Quant Fund, which received the Lipper Fund Award for the best performance over three years in 2016. The robo advisory package reflects the fact that the product has grown organically through the firm concentrating on its core strengths while still being open to new ways of doing things.
Swissquote Ltd is authorised and regulated in the United Kingdom by the Financial Conduct Authority under reference number 562170. Registered in England and Wales under number 07710095. VAT number 133445531. Registered Office: Boston House, 63-64 New Broad Street, London, EC2M 1JJ.
Advisory services, which can be bolted on to your choice of platform
Market-leading platforms MT4, MT5 and cTrader are all available
Regulated by two Tier-1 authorities, the FCA and ASIC
Super-fast and cost-effective trading based on impressive high-tech infrastructure.
Platform support available in multiple languages
Variety of accounts with no charges on deposits
Award-winning customer service
Pepperstone has for some time been a popular choice for those looking to engage in a degree of automation when trading. The trading architecture is some of the best in the market, ensuring high-speed execution, reliable trading conditions and tight trading spreads. It’s also regarded as trustworthy due to the high-grade regulators it operates under license from.
The Pepperstone set-up has always been very client-focussed and in its robo advisor services, Pepperstone has once again identified what its account holders want and delivered it.
Pepperstone Limited is a limited company registered in England & Wales under Company Number 08965105 and is authorised and regulated by the Financial Conduct Authority (Registration Number 684312). Registered office: 70 Gracechurch Street, London EC3V 0HR, United Kingdom.
What We Liked:
Easy to use platform and hassle-free account opening process
Accounts for all ages, including children
Free e-books and game-based educational tools to teach children about investing
Highly automated. All aspects of the investment process, including portfolio rebalancing, are performed by algorithms
Licensed by MAS
AI selects investments from more than 2,000 global ETFs
Transparent reporting of fees and other terms and conditions
Award-winning customer service
SquirrelSave’s robo advisory product is incredibly straightforward and it’s a strong contender for the award of best robo advisor for beginners in Singapore.
The firm was established in 2017 and built a strong reputation for taking the hassle out of investing. The intuitive functionality of the SquirrelSave platform and its stripped back aesthetics do make it easy to set up an account but behind the clean dashboard are a range of powerful artificial intelligence tools designed to match account holders’ needs to appropriate investment strategies.
SquirrelSave is a brand of PIVOT Fintech Pte. Ltd. (201716150D) which holds a Capital Markets Services licence (CMS100806) regulated by the Monetary Authority of Singapore.
What We Liked
Offers the security of a parent company with a market cap of over S$40bn
Operating for more 35 years
Regulated by Monetary Authority of Singapore
Tiered pricing terms. Cost-effective investing for those with large cash piles
Further reading provided on the investment strategies followed
In a good position to ride out any potential shake-down in the sector
There have been some bumps along the way during the move by Singapore robo advisors into the investment mainstream. The shuttering of Smartly in 2020 is a reminder to the challenges facing firms in what is a very competitive market. That fight for market share is ultimately good news for customers and has driven down fees and charges.
For those who are worried about the safety of their robo operator, UOB Trade combines the functionality of robo trading with the security of a big bank. The minimum account balance of S$5,000 and incremental deposit minimums of S$500 might put some off. But for existing UOB customers, it might be a convenient option.
UOB Asset Management Ltd. Company Reg. No. 198600120Z, regulated by MAS.
Even though the Singapore robo advisor sector is something of a ‘new kid on the block’, the listed firms have all set about doing the right thing in terms of regulatory approval. All are regulated by at least one Tier-1 authority and that means high levels of protection for account holders.
No one will offer guarantees that your investment will go up in value – that’s not how the markets work. But the listed advisors have set themselves up to be considered safe by MAS, FCA or ASIC.
Robo advised investments are typically associated with medium and long-term timescales. Choosing the right platform at the start can therefore provide clients with enough security to avoid sleepless nights. Customer protection features vary from regulator to regulator. As such, it’s recommended that some of the below features are provided by the platforms that make your shortlist.
Complaints procedures – being licensed requires brokers to have in place formal complaints procedures, and if the broker can’t resolve an issue, it’s possible to escalate it with the regulator.
Cash deposit protection schemes
Negative balance protection – not being able to lose more than your initial stake
Segregation of client funds – if the broker goes bust, your money is safe as it’s held in an independent account
Risk warnings – brokers are required to offer information on the risks associated with trading
Order execution policies – in place to ensure fair pricing and manage any potential conflicts of interest
Anti-money laundering rules – these are designed to enable authorities to clamp down on organised criminals and terrorists and help keep control on the payment system
The process of gaining regulatory approval takes time and money. Once licensed, firms then have to continue to demonstrate they are operating in line with the terms & conditions of their license. Any transgressions can leave the firm open to warnings, fines, and reputational risk. These all add up to the end-user being able to take some confidence from a platform being well-regulated. Any firm willing to become regulated will not only be open to higher levels of scrutiny but will also have a well thought out business plan designed to make the most out of it being seen as legitimate.
Pros and Cons of Robo Advisors
The big no-no for anyone looking to trade the markets is falling into the trap of using an unregulated scam broker. Robo advisory services have so far managed to evade scam operators, but nevertheless, all investors need to remain diligent.
Considering the time, effort, and expense good brokers put into being regulated, there’s little benefit from choosing a broker that isn’t on a list of trusted brokers, such as those provided above. In relative terms, robo advisors are something of a safe haven as the sector is aimed at retail investors, so regulators monitor the market very closely.
Another risk to consider is the fact that robo advising hasn’t really been tested by a ‘proper’ bear market. Investment strategies based on momentum and trends perform well during long bull runs, such as the one that started in 2009. Returns can dip when market mood shifts. As the old adage goes – the trend is your friend, until the bend at the end. If the 10 year-plus bull run is coming to an end, then the recent healthy returns generated by Singapore robo advisors may begin to stutter.
The final factor to consider is individual appetite for giving up investment management to a third party. Whichever way you look at it, investment returns are going to be largely determined by the performance of an agent that you don’t know too much about. On the other hand, such schemes are now a major part of the capital allocation of institutional investment programs such as pension funds. If the biggest investors in the world are happy to invest using algorithms, then why shouldn’t the ‘little guys’ do the same?
All the platforms on this list of best robo advisors in Singapore keep some of the details of their investment strategy private. Some are so worried about sharing details of their ‘secret sauce’ that they provide only limited information on the markets and instruments in which they operate.
The platforms still use the same Technical Analysis and Fundamental Analysis methods as individual investors to identify investment opportunities, but robo advisor account holders have to have a degree of trust that the algorithms will do their job. It’s also important for new clients to be realistic about their investment objectives. The investor profile built when signing up to a robo advisor will form the base of all subsequent investment decisions.
The stats point to more and more investors opting for the robo advisor approach. A lot of the stigma about letting computers manage investment decisions has disappeared. Human portfolio managers can make mistakes as easily as an algorithm can. Part of the DNA of robo advising is that investments are left to run.
One classic mistake for individual traders is to trade too much and the costs involved with that can be a real drag on long-term performance. Robo advising, therefore, not only incorporates a lot of the elements of investment good practise but also lets the account holder get on with their day job rather than have to spend too much time following the markets.