More fund management services going digital

Phillip Securities is the latest to join the online market with a fund management service for customers.
Ms Lisa Lee of Phillip Securities, which offers a new fund management service for equity, fixed income, resources and commodities.
Ms Lisa Lee of Phillip Securities, which offers a new fund management service for equity, fixed income, resources and commodities.ST PHOTO: FELINE LIM

Consumers looking to create investing portfolios online now have another option.

Phillip Securities is the latest to join the online market with Phillip Smart Portfolio, a fund management service.

Customers go through a quick process involving an online risk assessment that matches the person to the "best-fit" portfolio and that provides periodic rebalancing. Portfolios invest primarily in exchange-traded funds (ETFs) listed on the Singapore Exchange.

Phillip Securities executive director Lisa Lee, speaking to The Straits Times, said: "We have been conceptualising this for years and Smart started to take its form last year. Smart covers all the major areas of equity, fixed income, resources and commodities."

She added that historical and expected returns for investors depend on the type of investments - including asset class, regional or sector considerations.

"For Smart, our back-testing shows that we can expect to achieve 4 to 6 per cent per annum over the long term," she said.

Phillip Securities, which is one of several retail-focused brokerages here, set up Poems in 1996, the first online trading system in Singapore. It has stepped up its game recently, with moves such as scrapping sales fees for unit trusts traded online and introducing its new trading platform in January.

Consumers can start using Smart to invest with $5,000 and a management fee of 0.5 per cent a year. There are no upfront, brokerage or platform fees.

Ms Lee expects the take-up rate to grow, saying: "We see exponential growth in the years ahead when investors are more aware of this service and Internet trading becomes the norm."

Phillip Securities is not the only player in town that hopes digital advice will catch on. Independent wealth management firm Crossbridge Capital started its digital advisory platform for accredited investors last November, while Fundsupermart's FSMOne offers five investment portfolios by robo- advisers with no sales charge.

FSMOne's robo-advisers, for instance, have created investment solutions that automate functions, such as constantly tweaking asset allocation strategies in the portfolio of financial products an investor chooses to invest in.

Insurance players have also entered the arena. Fee-based retirement planner Providend has a life insurance robo-adviser that gives consumers an assessment of their life insurance needs on

Mr Charlie O'Flaherty, head of digital strategy and distribution at Crossbridge Capital, said last month: "An approach like using a robo-adviser, that gives you the investment portfolio you need more efficiently and conveniently than traditional savings and investment products, is only going to grow in demand.

"In a world where fees for mutual funds, private banks and insurance firms can reach 5 per cent or more, robo-advisers all offer lower headline fees. What's more, they do not tend to work on a commission model, and fees within robo products are usually more transparent too."

Mr Ho Song Hui, Fundsupermart's assistant director, research and portfolio management, said the robo-adviser scene here is not as developed as the United States, perhaps limited by a restricted range of ETFs here.

Many robo-advisers in the US use ETFs for their portfolios, he added.

A Monetary Authority of Singapore spokesman said it has received interest from existing Capital Markets Services licensees and new players to offer robo-advisory services.

A public consultation will be held on these services to ensure they deliver sound advice.

Ms Lee said: "Such portfolios are fairly new in the Asian market but we've seen many successful examples from the West. We are hoping that through more education and awareness for the public, customers will get more familiar and comfortable with this type of investing.

"With lower fees compared to traditional fund managers, customers are getting into high-quality portfolios."

A version of this article appeared in the print edition of The Straits Times on March 07, 2017, with the headline 'More fund management services going digital'. Print Edition | Subscribe