Take one look at the local fintech scene and you’d observe that the popularity and number of robo-advisors in the market have been on the rise.
They’re best described as wealth management platforms that automate the process of investing money on the user’s behalf via algorithms, with little to no human supervision.
Typically, a robo-advisor starts out by collecting information from users about their financial situation and future goals, and it will then use this data to determine what investment portfolio is best suited for the user.
Many enjoy using robo-advisors as they offer easy account setup, portfolio management, and low fees, amongst other benefits.
These features further allow for financial inclusion, as one doesn’t need to have extensive knowledge on investing to use robo-advisors.
Whether you’re looking to start your first investment portfolio with the help of a robo-advisor or are simply looking for more options, let us introduce you to the 4 licensed players we have in Malaysia.
MYTHEO is a Malaysian-Japanese joint venture, with its story beginning in Japan at a fintech company called Money Design.
In 2016, Money Design launched the very first robo-advisor (called THEO) in Japan, under the regulation of the Japan Financial Services Agency.
Together with Silverlake Group, a software organisation with over 30 years of experience in the financial sector in Malaysia and throughout Asia, Money Design formed GAX MD.
GAX MD is the joint venture that was designed to tailor THEO for Malaysians, hence the name MYTHEO.
Track Record: THEO has helped over 75,000 Japanese investors and managed more than US$450 million in total assets since 2016.
In Malaysia, MYTHEO was licensed by the Securities Commission (SC) in 2019 and has had no major issues publicised thus far.
Starting Out: MYTHEO lets you begin investing with a minimum of RM100 in capital, and any subsequent top up can also be as low as RM100.
Withdrawal Fees: You can withdraw any amount from your MYTHEO account at any time without paying any fees.
Portfolio Switching Fees: The first 6 switches in a calendar year are free. Subsequent switches in the same calendar year will cost US$2.50 per switch.
Annual Management Fee: MYTHEO has tiered rates per annum according to your investment amount in MYR (based on the indicative US$ exchange rate at 4.00):
- First RM30,000, it’s 1%,
- Next RM30,000 to RM100,000, it’s 0.9%,
- Next RM100,000 to RM300,000, it’s 0.8%,
- Next RM300,000 to RM500,000, it’s 0.7%,
- Next RM500,000 to RM1,000,000, it’s 0.6%,
- Over RM1,000,000, it’s 0.5%.
There are no trading fees, exchange fees, redemption fees, or surprise charges.
2. Raiz Invest (Raiz)
Originally launched in Australia in 2016, Raiz is a micro-investing robo-advisor app that utilises users’ virtual spare change from rounding up everyday purchases made with a Maybank debit card.
Aside from this round-up investment model, users can also choose to invest using lump-sum investments and recurring investments.
It was developed as a joint venture between Permodalan Nasional Berhad’s (PNB) subsidiary Jewel Digital Ventures and Raiz Invest Australia, and received its license to operate here in 2020.
Track Record: Since launching in 2016 in Australia, Raiz has amassed more than 1.15 million downloads and 791,000 signups.
It boasts over 211,000 active monthly users and has managed over AU$444 million in funds as of December 31, 2019.
Thus far, no major issues experienced by users have been publicised.
Starting Out: Raiz allows users to begin investing with as little as RM5.
Withdrawal Fees: You can withdraw any amount from your Raiz account at any time without paying any fees or penalties.
Portfolio Switching Fees: None.
Annual Management Fee: Raiz charges 2 types of fees:
- A monthly account fee of RM1.50 if your Raiz Investment Account has a value of less than RM6,000 at the end of each month,
- An annual fee of 0.3% (charged monthly, computed daily) if your Raiz Investment Account has a value of RM6,000 and more at the end of the month.
No fees are charged for accounts with a RM0 balance.
StashAway got its start in 2016 in Singapore and soon entered Malaysia in late 2018.
It was the first company in Malaysia to be awarded a Capital Market Services License and carry out fund management activities as set out by the Digital Investment License framework.
It is licensed by the Monetary Authority of Singapore, and in Malaysia it received its license from SC in November 2018.
Track Record: In 2019, StashAway shared that it had served its first 100,000 clients.
Since starting out, StashAway had no blemish on its record up until July 27, 2020 when an anomaly experienced by its direct debit service provider in Malaysia, Curlec, left some Malaysian users with drained bank accounts.
The error caused back-to-back automated transactions from users who had set up automated monthly payments to StashAway Malaysia, but the team was quick to respond and take action.
At the moment of writing, StashAway Malaysia is working on delivering a detailed tech post-mortem analysis to provide transparency to its affected users as well as to ensure that such a thing would not be repeated.
Despite the disruption, StashAway Malaysia is proving itself capable of handling such a disruption with tact and care.
Starting Out: There is no minimum investment amount needed to get started.
Withdrawal Fees: None.
Portfolio Switching Fees: None.
Annual Management Fee: StashAway has tiered rates per annum according to your total investment amount in MYR:
- First RM50,000, it’s 0.8%,
- Next RM50,000 to RM100,000, it’s 0.7%,
- Next RM100,000 to RM250,000, it’s 0.6%,
- Next RM250,000 to RM500,000, it’s 0.5%,
- Next RM500,000 to RM1,000,000, it’s 0.4%,
- Any additional amount above RM1,000,000 up to RM3,000,000, it’s 0.3%,
- Any additional amount above RM3,000,000, it’s 0.2%.
4. Wahed Invest
Wahed Invest is an ethical Islamic (halal) investment platform based in New York. It was established in 2015 but only soft-launched in September 2016 after a year of product development and beta testing.
It has an ethical review board that monitors the company’s investments to make sure they’re in agreement with Islamic values—they cannot involve liquor, firearms, gambling, or tobacco industries, nor can they generate excess profit from interest.
Wahed Invest launched in Malaysia on October 30, 2019 after receiving its license from SC on October 21, 2019.
Track Record: Wahed Invest announced on its Facebook page that it had finally acquired 100,000 clients globally as of July 12, 2020.
Based on a quick scour of the internet, there has been no news of controversy or issues surrounding the wealth management platform.
Starting Out: There is a minimum fee of RM100 that you would need to invest as capital to get started on Wahed Invest.
Withdrawal Fees: None.
Portfolio Switching Fees: None.
Annual Management Fee: Wahed Invest’s annual fees are:
- 0.79% of your total investment amount if it’s between RM100 to RM499,999,
- 0.39% of your total investment amount if it’s RM500,000 or more.
According to its site, there are zero trade fees, hidden fees, or rebalancing fees.
One platform that appears similar to a robo-advisor but doesn’t define itself as such is BEST Invest.
It defines itself as a robo-intelligence platform instead, as its use of big data technology, analytics and algorithms are more for the decision-making process, not for advisory practices.
BEST Invest was launched in April 2020 by BIMB Investment Management Bhd, a wholly-owned subsidiary of Bank Islam Malaysia Bhd.
It is BIMB Investment’s first robo-intelligence investment platform that allows users to invest in Shariah-ESG compliant funds.
Dictionary Time: Shariah-compliant funds are one of many categories found in socially responsible investing. Similar to other socially responsible funds within the environmental, social and governance (ESG) universe, the funds screen potential portfolio investments for specific requirements desired by followers of the Muslim religion.Investopedia
Raiz was the latest robo-advisor to enter the Malaysian market, but fast on its heels may be Thailand-based Robowealth Mutual Fund Brokerage Securities, which has also already obtained its license to operate from SC.
However, no official launch date has been given for Robowealth. Nonetheless, there’s no doubt that the Malaysian fintech scene is slowly getting more occupied by robo-advisors, to the benefit of users.
- You can read more on what we’ve written about fintech here.
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