StashAway introduced 3 new portfolios last month and Financial Horse has done an excellent write up on it - The Weekly Horse: Review of StashAway’s new “High Risk” Portfolio. Do read it if you have not as it is definitely interesting enough for Michele, the CEO of StashAway to leave his comment.
Due to the introduction of the new portfolios, we had some unpleasant experience with StashAway. This would have been a post by itself if we did not go to New Zealand and gotten so busy with our wedding preparations. I am willing to take on more risks (stock picking, buy small caps, try out robo, etc.) while CZM is the more conservative one (STI ETF and blue chips). When I knew StashAway was introducing higher risk portfolios, I was pretty excited as I felt that the previous highest risk portfolio, P28 was still very conservative.
On the day it launched (16th August 2018), an email was sent out at 5:30pm. I WhatsApp CZM and after reading and updating the app, I flipped the switch to the highest risk portfolio. Around 7pm, CZM replied and said she's not comfortable with taking more risk so I flipped it back although I saw some pending transactions. I thought it should not be much of an issue since there were ~2 hours before the US market opens and the next batch job should correct/cancel the pending transactions or so I thought...
To my horror, the next day (17th August 2018), most of the shares were sold! The even more ridiculous part was there were multiple pending transactions to buy back the same shares and the transactions happened on the following day (18th August 2018). The shares were sold at a lower price and bought back at a higher price the next day. As a result, we now owned lesser units of shares than what we originally had. To be fair, it could have ended up either way (sold higher and bought back lower) but it was the more unfortunate way for us. Let that sink in...
Meanwhile, I was emailing StashAway to understand what exactly was going on. In short, the orders are consolidated only once at 6pm and there is no internal netting of orders if you are wondering. As usual, there is nothing to hide so you can read the whole email thread hosted here, word for word except for their emails and contact numbers which have been masked.
Having said that, it takes two hands to clap. I am at fault for not confirming with CZM first but it also shows the limitation of their system. In addition, given the limitation of the systems to consolidate orders only once at 6pm, such email communication should not have been sent out at 5:30pm. This would not have happened if it was communicated early in the day, after 6pm or even during the weekends.
Hopefully, you guys will learn from my mistake and not have to suffer :) Alright. Enough ranting, back to the monthly update!
1. ACCOUNT SUMMARY (as of the last day of the month)
Based on the statement (31 August 2018), we gain $370.75.
2. PORTFOLIO DETAILS
3. TRANSACTIONS
SELL transactions - highlighted in yellow
BUY transactions - highlighted in blue
SGD $990.00 converted to USD $722.64 (USD $726.40 last month)
Exchange Rate: 1.3700 (1.3629 last month)
4. FEE CALCULATIONS
The actual fee as stated is based on the monthly-average assets SGD $10,662.31 x 0.8% / 365 days * 31 days = $7.24
I blogged about how the $5 fee credit in StashAway - April 2018. I was charged management fee despite having the referral waiver and was given this credit in return for their mistake.
StashAway VS STI ETF
Since there is no way to compare the performances among the robo-advisors, I came out with a spreadsheet to track our StashAway portfolio performance (General Investing - Risk Level 28) against that of STI ETF which I will be updating on a monthly basis. For simplicity, I shall assume that one can either invest in Nikko STI ETF using POSB Invest-Saver or invest in Nikko STI ETF/SPDR STI ETF using SCB Priority Online Trading (no minimum commission). These would be the opportunity costs while we continue to invest in StashAway.
Apart from the absolute P&L, we should also look at the Reward-to-Risk Ratio where risk/volatility is taken into account. For more information, do read StashAway Clarifications - Reward-to-Risk Ratio. StashAway has the highest ratio of 1.25 which is significantly higher than the other 2 STI ETFs (< 0.4). Let me quote Freddy Lim (Co-Founder & Chief Investment Officer of StashAway), "for every dollar of risk taken, StashAway P28 is producing 1.25 times the return".
This month commentary: StashAway is the only one making money with an XIRR of 5.34%! One year later, we finally see StashAway's fees > SCB Priority Online Trading commissions. The difference will only continue to get bigger and if such performance can continue, we certainly would not mind paying more fees for a higher return. Like I mentioned previously, those that are already doing DCA on STI ETF, do not be disheartened and stop your investment. Try as much as possible to stick to your plan and in the long run, it will turn out well.
Going forward it will be even more interesting when the commissions/fees incurred by StashAway exceed that of POSB Invest-Saver. This will be a battle between cheaper/lesser fees and asset allocation/diversification...
I believe there is a need to redo/regenerate the volatility used to compute the Reward-to-Risk Ratio. Do take it with a pinch of salt for now. I have been compiling some data in order to do so :)
You might be interested in previous months update too:
StashAway - January 2018
StashAway - February 2018
StashAway - March 2018
StashAway - April 2018
StashAway - May 2018
StashAway - June 2018
StashAway - July 2018
Which is the best? Only time will tell :)
This is the link to our spreadsheet - KPO & CZM StashAway Portfolio VS STI ETF which I have also added to Our Portfolio page.
StashAway Referral Link for Our Readers
Here you go: KPO and CZM Referral Link
Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right -->)
Due to the introduction of the new portfolios, we had some unpleasant experience with StashAway. This would have been a post by itself if we did not go to New Zealand and gotten so busy with our wedding preparations. I am willing to take on more risks (stock picking, buy small caps, try out robo, etc.) while CZM is the more conservative one (STI ETF and blue chips). When I knew StashAway was introducing higher risk portfolios, I was pretty excited as I felt that the previous highest risk portfolio, P28 was still very conservative.
On the day it launched (16th August 2018), an email was sent out at 5:30pm. I WhatsApp CZM and after reading and updating the app, I flipped the switch to the highest risk portfolio. Around 7pm, CZM replied and said she's not comfortable with taking more risk so I flipped it back although I saw some pending transactions. I thought it should not be much of an issue since there were ~2 hours before the US market opens and the next batch job should correct/cancel the pending transactions or so I thought...
To my horror, the next day (17th August 2018), most of the shares were sold! The even more ridiculous part was there were multiple pending transactions to buy back the same shares and the transactions happened on the following day (18th August 2018). The shares were sold at a lower price and bought back at a higher price the next day. As a result, we now owned lesser units of shares than what we originally had. To be fair, it could have ended up either way (sold higher and bought back lower) but it was the more unfortunate way for us. Let that sink in...
Meanwhile, I was emailing StashAway to understand what exactly was going on. In short, the orders are consolidated only once at 6pm and there is no internal netting of orders if you are wondering. As usual, there is nothing to hide so you can read the whole email thread hosted here, word for word except for their emails and contact numbers which have been masked.
Having said that, it takes two hands to clap. I am at fault for not confirming with CZM first but it also shows the limitation of their system. In addition, given the limitation of the systems to consolidate orders only once at 6pm, such email communication should not have been sent out at 5:30pm. This would not have happened if it was communicated early in the day, after 6pm or even during the weekends.
Hopefully, you guys will learn from my mistake and not have to suffer :) Alright. Enough ranting, back to the monthly update!
1. ACCOUNT SUMMARY (as of the last day of the month)
Based on the statement (31 August 2018), we gain $370.75.
As of 10 September 2018, we gain $34.81 from investment returns with a huge currency impact of $302.34. Not good! In our last monthly update, I said that I would have preferred the USD to be weaker because we will be going to the US for our honeymoon. Weaker USD meant that we can convert the same SGD for more USD to invest too.
SGD time-weighted returns: 6.9%
USD time-weighted returns: 0.7%
USD time-weighted returns: 0.7%
2. PORTFOLIO DETAILS
3. TRANSACTIONS
SELL transactions - highlighted in yellow
BUY transactions - highlighted in blue
SGD $990.00 converted to USD $722.64 (USD $726.40 last month)
Exchange Rate: 1.3700 (1.3629 last month)
4. FEE CALCULATIONS
The actual fee as stated is based on the monthly-average assets SGD $10,662.31 x 0.8% / 365 days * 31 days = $7.24
I blogged about how the $5 fee credit in StashAway - April 2018. I was charged management fee despite having the referral waiver and was given this credit in return for their mistake.
StashAway VS STI ETF
Since there is no way to compare the performances among the robo-advisors, I came out with a spreadsheet to track our StashAway portfolio performance (General Investing - Risk Level 28) against that of STI ETF which I will be updating on a monthly basis. For simplicity, I shall assume that one can either invest in Nikko STI ETF using POSB Invest-Saver or invest in Nikko STI ETF/SPDR STI ETF using SCB Priority Online Trading (no minimum commission). These would be the opportunity costs while we continue to invest in StashAway.
Apart from the absolute P&L, we should also look at the Reward-to-Risk Ratio where risk/volatility is taken into account. For more information, do read StashAway Clarifications - Reward-to-Risk Ratio. StashAway has the highest ratio of 1.25 which is significantly higher than the other 2 STI ETFs (< 0.4). Let me quote Freddy Lim (Co-Founder & Chief Investment Officer of StashAway), "for every dollar of risk taken, StashAway P28 is producing 1.25 times the return".
This month commentary: StashAway is the only one making money with an XIRR of 5.34%! One year later, we finally see StashAway's fees > SCB Priority Online Trading commissions. The difference will only continue to get bigger and if such performance can continue, we certainly would not mind paying more fees for a higher return. Like I mentioned previously, those that are already doing DCA on STI ETF, do not be disheartened and stop your investment. Try as much as possible to stick to your plan and in the long run, it will turn out well.
Going forward it will be even more interesting when the commissions/fees incurred by StashAway exceed that of POSB Invest-Saver. This will be a battle between cheaper/lesser fees and asset allocation/diversification...
I believe there is a need to redo/regenerate the volatility used to compute the Reward-to-Risk Ratio. Do take it with a pinch of salt for now. I have been compiling some data in order to do so :)
You might be interested in previous months update too:
StashAway - January 2018
StashAway - February 2018
StashAway - March 2018
StashAway - April 2018
StashAway - May 2018
StashAway - June 2018
StashAway - July 2018
Which is the best? Only time will tell :)
This is the link to our spreadsheet - KPO & CZM StashAway Portfolio VS STI ETF which I have also added to Our Portfolio page.
StashAway Referral Link for Our Readers
Here you go: KPO and CZM Referral Link
Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right -->)
Hi KPO,
ReplyDeleteThanks for informing on the limitation of the system!
Btw, given the disparity in risk appetite between you and CZM, have you guys considered setting up a separate account / portfolio? Perhaps this way, you guys can invest according to one's risk tolerance level.
Hi The Boy Who Procrastinates,
DeleteWe have different portfolio for SGX stocks. Never really thought of setting up different portfolio in StashAway because P28 then was the most risky (for me) yet diversified/conservative enough portfolio (for CZM). Hahaha.
Having said that, the fund going to StashAway is our mutual fund so it makes sense to stick to one portfolio and take the more conservative approach :)
Hi both!
ReplyDeleteI know not linked to the post, but i was wondering if you could take a look at QAF and share some thoughts + what you make of the recent plunge due to meat production not doing well!
Thanks!!
Hi jcsemaj1,
DeleteTook a quick look at QAF. The recent plunge is in line with their quarterly results. What used to take up 50% of their profit is generating close to nothing now. If this continues, the dividend will not be sustainable as well...
Shall blog about this one day. Haha.