Continuing our miniseries on robo advisor reviews, we’d like to look at the OCBC RoboInvest next.
Robo advisors are hassle-free, fully computerised platforms where beginners with little capital can start investing. As opposed to traditional investment brokerages, robo advisors use algorithms to figure out your investment portfolio. This is why you pay much lower commission fees and of course, that’s why people like it.
If you don’t have much know-how about investing, it’s great tool to get you acquainted and make your money work for you.
The downside is that you don’t have much control over what goes into your investment portfolio. All portfolios have been pre-designed by the company you decide to invest with.
Previously, we have looked at robo advisors like Stashaway. When OCBC launched their robo advisor platform to the public, they were the first bank in Singapore to offer it. But does that make them any different from the other robo advisors?
How does OCBC RoboInvest work?
To be eligible for OCBC RoboInvest, you need to have either an OCBC current or savings account. You will also need access to OCBC’s online banking.
You can easily start investing via OCBC’s Internet banking. Select “ETFs and Equities” and you will be directed to the OCBC RoboInvest platform. Similarly on OCBC’s mobile banking, click “Invest” on the menu bar and select “OCBC RoboInvest”.
You will then be guided through a series of questions to direct you to a suitable investment portfolio. Investment funds can be channelled directly from your OCBC deposit account. Subsequently, you can log on and monitor your portfolio online anytime.
What are OCBC RoboInvest’s fees?
OCBC RoboInvest charges a service fee of 0.88% per annum on the total value of your investments. The annual fees does not include currency conversion fees as well as exchange-traded funds (ETFs) management fees. Depending on the markets and trading channels OCBC uses to carry out the investments, additional exchange fees and charges will apply.
For example, if you trade in the Hong Kong market, there’s a stamp duty of 0.1% of contract value and an exchange fee of 0.077% of contract value.
What is the minimum investment for OCBC RoboInvest?
Unlike some robo advisers like Stashaway, which does not require a minimum amount to start investing, the initial minimum investment for OCBC RoboInvest is US$100. This varies for the different portfolios available on OCBC RoboInvest.
How do you choose an OCBC RoboInvest investment portfolio?
First, determine your risk appetite and choose from 3 selections: low, medium, and high.
From there, choose from several thematic portfolios that match your preference. Portfolios like the aptly named “The All Weather” and “Balanced” cater to those with low-medium risk appetite. Others like the “Stable US Giants” cater to those with a higher risk appetite.
The portfolios contain up to 4 asset classes: equity, fixed income, commodity and cash, in varying percentages. The low-medium risk portfolios will contain a balance of all 4 asset classes while the higher risk portfolios contain only equity and cash.
If you are an experienced investor with a high risk appetite but are too busy to do your own research, OCBC RoboInvest can also plan out a portfolio for you based on your specific target and preferences. All you need to do is select the annualised return, the region you wish to invest in and the risk level you are willing to take.
What are the investment portfolios available to choose from?
OCBC RoboInvest has 37 thematic portfolios of equities and ETFs across 7 markets: Singapore, Australia, Britain, the United States, Europe, China and Hong Kong.
The good thing about OCBC RoboInvest’s portfolios is that they offer geography-specific portfolios. They allow you to avoid investing in certain markets like the US market because of their volatility and taxes. Instead, you can choose other portfolios like the “Stable Aussie Giants”, the “Stable Singapore Giants” or the “Hong Kong property”.
Portfolios are rebalanced every quarterly or half-year basis. The automatic rebalancing helps you to maintain your risk profile based on how the market is evolving and increases your overall returns.
OCBC RoboInvest vs StashAway
StashAway has been around earlier than OCBC RoboInvest and is a popular robo advisor amongst Singaporeans because of its zero minimum investment criteria and user-friendly investing app.
On the other hand, OCBC RoboInvest requires an initial minimum investment amount of US$100. However, depending on the portfolio you choose, the amount may be as high as US$6,000.
As such, StashAway would appeal more to beginners with low risk appetite simply due to the low minimum investment amount. The highest risk portfolio is actually equivalent to a 100% equity portfolio, but you can only choose high-risk settings based on your understanding of risk during the initial financial assessment.
Their annual fees are comparable. Stashaway has an annual fee rate of 0.8%++ for the first $25,000 of total investment while OCBC RoboInvest is at 0.88%++ (currency conversion fees as well as ETFs management fees). If you invest an amount more than $25,000, though, the annual fees rate at StashAway decreases to as low as 0.2% (for investments above 1 million).
Both platforms are easy to set up and monitor via desktop or apps.
The biggest difference between the two probably boils down to customisation of investment portfolios. As mentioned, OCBC RoboInvest has a wide range of portfolios and offers geography-specific portfolios. This allows you to avoid investing in a certain market if you find it too risky for your liking.
On the other hand, StashAway offers goal-based investment plans based on the reason you are investing and your risk appetite. You would be prompted with questions such as: Is it for retirement, purchasing a flat or for your child’s education?
The portfolios aren’t arranged by geography for Stashaway. However, the platform works out a portfolio based on an algorithm and you have a choice to go with a higher or lower risk level.
OCBC RoboInvest vs DBS digiPortfolio
If you have an account with a bank, it’s just that much easier to invest your money with the same bank. Otherwise, you’d have to go through the process of opening a new account, wiring your funds over, yada, yada. So, before going the whole nine yards, you’d want to weigh your options first.
Let’s start with the fees to see how the DBS digiPortfolio fares against OCBC RoboInvest. DBS digiPortfolio charges a standard fee of 0.75% regardless of your total investment value. OCBC RoboInvest, on the other hand charges an annual fee of 0.88%. On top of that, the minimum investment amount for DBS digiPortfolio is $1000 and US$1000 for the Asian and Global markets respectively. OCBC RoboInvest, on the other hand, has varying minimums depending on the portfolio. While it can be as low as US$100, it can also go up to the thousands for certain portfolios.
Speaking of which, OCBC RoboInvest has a greater range of 37 portfolios you can take your pick from. If you’re investing with DBS digiPortfolio, you have two options of either a global or Asia portfolio. If you’re a complete beginner, DBS digiPortfolio is one that might be easier to navigate, especially if you’re looking to invest in the Asia portfolio. The global portfolio does require some prior knowledge – you’ll be tested with questions to decide if you’re illegible.
Overall, DBS digiPortfolio has a lower barrier of entry with a low minimum investment requirement of $1,000 and its simplified portfolio options. If you’re a beginner, DBS digiPortfolio is relatively easier to navigate.
So, is OCBC RoboInvest good?
If the initial minimum investment which varies from portfolio to portfolio and the 0.88%++ annual fees do not perturb you, I would say that the OCBC RoboInvest is great based on their wide selection of 37 investment portfolios.
With other robo advisors, the set algorithms churn out portfolios based on few questions. This means that one has to fully trust in the company’s investment methodology with little control. The advantage of using OCBC RoboInvest is that you can select from a range of portfolios that best suits you.
On top of that, you might find that investing with an actual bank gives you more assurance because of the bank-grade security as well as their expertise in investment and the global financial markets.
How about you? Would you ever try growing your money with OCBC RoboInvest?