Tag: Roboadvisory

Syfe investment methodology

After seeing the “weird” portfolio allocation for Syfe I attended one of their introductory seminar to get a better understanding of their investment methodology and framework.

I was also sent a link to their website containing link to two whitepaper underlying their methodology.

I have to admit I don’t fully understand what is being written in these white papers but in simplest term I believe Syfe view risk as a function of not only portfolio allocation but also market volatility.

Graph extracted from the paper “Constant volatility framework for managing tail risk” sourced from Syfe

They view probability of outsized “drawdown” or losses as being greater in period of market volatility hence will rebalance the portfolio for the increased risk by shifting away from normal % of equity/bond allocation.

The theory is that by avoiding the worst of the downturn the portfolio will not have to recover as much to outperform static portfolio.

Their recent performance in rebalancing through the market downturn show that their framework is capable of reducing portfolio risk in a real market downturn. The jury is still out on whether they can be as nimble on the uptrend as well since they have missed the rally over the last 8 weeks.

Since my initial post yesterday, DJI was down 1,861 points (6.9%) last night.

This rally have been illogical in light of the poor underlying economic data and was built upon assumption of a perfect recovery from the Covid shutdown. Many market observer remain skeptical but I honestly do not know enough to have an opinion either way but is selecting stock for my active portfolio with plenty of margin of safety to weather any economic downturn.

Time may vindicate Syfe’s decision to stay on the sideline. I honestly do not know how well their framework will work and how consistently they will be successful.

But I have to say their customer service have been top notch allowing me to speak to their advisory team prior to committing fully to a portfolio with them.

By contrast my email to Stashaway remain unanswered since 10th June.

DBS Digiportfolio

TLDR: DBS Digiportfolio is conservative even on its most aggressive setting. With DBS as the counterparty it is perhaps one of the safest roboadvisory “startup” in the market. As the portfolio is rather simple, one can possibly recreate the portfolio manually without incurring the management fee.

DBS offer 2 ETF based robo advisory portfolio focusing on either Asia or Global.

Asia Portfolio
There’s 3 risk level ranging from mixture of 48%/45%/7% (Equity/Fixed Income/Cash) in the low risk portfolio to 73%/20%/7% in the “Fast and Furious” portfolio.

Keeping with my “Fast n Furious” selection for Stashaway, I will only be looking at the more aggressive portfolio.

For the equity portion, the holding is in 4 category:
1) Asia REITS ex Japan
2) Singapore STI
3) MSCI China
4) MSCI India

Assuming an equal split between the 4 categories, the china weighting for this portfolio will only be around 18%.

I will not delve too much into this portfolio as even in its most aggressive setting, it is still rather conservative.

Singapore STI for example consist mainly of REITS and financials. There is not much growth there in my opinion. With further allocation into REIT funds and bond, the portfolio will be very conservative.

In the 2 year preceding today, the portfolio roughly breakeven.

Global Portfolio
There’s 3 risk level ranging from mixture of 15%/78%/7% (Equity/Fixed Income/Cash) in the low risk portfolio to 75%/18%/7% in the “Fast and Furious” portfolio.

The composition of the portfolio is rather vanilla, just a blend of US, Europe, Asia and Japan.

In the 2 years to date, the portfolio have a total return of around 7.36%

While the portfolio is projecting a 10 years average return of 102.2%, their return in the last 2 years made me doubt that this is achievable. (Even excluding the March drop).

While this portfolio is more attractive than the Asian portfolio earlier, it is rather vanilla and easily replicated by an investor with a reasonably sized portfolio without paying the 0.7%.

The Digiportfolio is rather conservative but with DBS as the counterparty it is one of the safest roboadvisory portfolio in the market. I think what they offer is good for people that want safety over excitement as the name FnF suggest.