In Asia, fintech firms have been introducing robo-advisory platforms while asset and wealth managers continue to explore them.
FSA presents the monthly performance of three robo-advisors. The purpose is to highlight how robo-advisors allocate and how they perform against their benchmarks, particularly when there is a downturn.
FSA ROBO-ADVISOR SHOWCASE
PERFORMANCE ON 1 APRIL 2020
Note: Three portfolios for each robo-advisor are presented – cautious, balanced, and aggressive — each with an initial investment of a (hypothetical) $1m.
However, because the firms operate in different markets and offer different products, the robo-advisors are not competing against each other but against their own benchmarks.
In addition, FSA does not have direct access to each robo-advisors’ app or platform, and performance figures are provided to us monthly through the firm’s official factsheet.
Founded in 2016 by Asheesh Chanda and Vineeth Narasimhan, Kristal AI has become operational in India, Singapore and Hong Kong, with clients across Asia, the Middle East and the Americas. Its platform makes use of an algorithm that considers investor goals and risk appetite to suggest the most suitable investment options.
Kristal AI now has around 10,000 users. In terms of AUM, assets have grown to at least $100m from $25m in January last year. The firm also secured in February its $6m Series A funding from venture capital firms and family offices.
For retail investors, the platform’s algorithms make use of ETFs for client portfolios. Professional investors, meanwhile, have the option to make customisations in their portfolios, such as buying investment products that are not available to the retail segment.
Kristal AI does not charge any fees, such as advisory, brokerage and performance fees, for account balances less than $50,000. Accounts exceeding $50,000 are charged a flat 0.3% per annum.
The firm has been adding new ETFs every month to its platform, some of which offer exposure to asset classes that are not usually offered in Asia, such as stocks in the cannabis and uranium sectors.
While the coronavirus outbreak has led to to a lot of businesses to a standstill, robo-advisors in Asia seem to have benefited, Vivek Mohindra, the firm’s Hong Kong-based co-founder, said recently.
Kristal AI, which has operations in Hong Kong and Singapore, saw its weekly active users increase 21% in March to 5,100, which include new and current clients, from 4,200 in February.
*Raiz’s portfolios are only in Australian dollars. Initial hypothetical investment was A$1m
Australian robo-advisory firm Raiz Invest launched its mobile robo app in 2016. As of the end of March, the platform has A$371.5m ($306.7m) in AUM, which is 20% lower compared with A$464.7m in February, according to an exchange filing.
“Despite the difficult times for the many young people losing their jobs as a direct consequence of the economic fallout from the Covid-19 pandemic, the vast majority are remaining loyal to Raiz with March active customers only falling 2.4%,” George Lucas, the firm’s CEO, said in the filing. As of the end of March, active users totalled 215,398, compared with 220,643 in February.
Users can invest in either domestic superannuation accounts or in a portfolio of ASX-listed ETFs. The platform charges investors flat fees of A$2.5 per month for accounts under A$10,000 or 0.275% per year for accounts more than A$10,000.
Raiz Invest has expanded outside its home market and has targeted Southeast Asian investors. In December, it gained relevant licences in Indonesia and expects to roll-out its robo-advisory platform in the country by the third quarter. According to an announcement last month, 40,000 customers in the country have signed up to Raiz Invest’s beta app.
In May, it signed a joint venture agreement with Malaysian asset management firm Permodalan Nasional. It expects to commence with its beta testing in March.
Hong Kong-based robo advisory firm Magnum Research launched Aqumon in 2018 for retail investors and has since gathered 5,000 clients in Hong Kong, with an average investment of HK$200,000 ($25,498) from each investor.
The platform assigns 10 different risk profiles to investors depending on their investment appetite. However, there could be up to 13,000 different combinations for each individual. Investors have the option to invest in either Hong Kong-listed or US-listed ETFs.
The service does not have a subscription fee and has a 0.8% annual investment advisory fee.
In January, the firm also launched a stand-alone all-bond ETF portfolio for Aqumon users.
Like Kristal AI, Magnum Research claims that more users have been more interested in using the platform despite the coronavirus outbreak.
Without giving exact numbers, Ken Shih, the firm’s Hong Kong-based head of sales and marketing, claimed that mobile app downloads increased 16% during the first quarter from the full-year 2019. Net inflows also spiked 91% during the same period, he added.
Besides Aqumon, Magnum Research has entered into B2B partnerships with a number of distributors and institutions in the region, which include CMB Wing Lung Bank, Shenzhen-based China Resources Bank of Zhuhai, China Resources Bank and BOC International in Hong Kong.