It’s been a while since I have written about the portfolio performance of our StashAway accounts. But I do update their portfolio performance overviews monthly (along with that of our DBS DigiPortfolios) on my blogpage if you are interested to know how they have been doing this year. I reckon 2020 will be a watershed year for robo advisors. Because it shows how effective they can be if utilised correctly. When I looked at the portfolio performance of our StashAway accounts since the 1st deposit in 2017, the results are fascinating.
Even though we were one of the early adopters of StashAway in 2017, we were only putting in a few hundred dollars every month then. The concept of robo advisors was new at that time and they were one of the first entrants into the local market. We wanted to see them prove themselves before we committed more of our cash funds. For the first 2 years until mid 2019, the returns were nothing to shout about. This was the time when people began to give up on robo advisors, started making comments they were over rated, not worth the fees and even exited their investments.
By then we were getting more comfortable with the long term sustainability of StashAway and had begun to increase our monthly deposits in it for investing. We even manually transferred cash funds into it when there were dips in the markets. We kept going even though we were told we can do better and achieve higher returns by investing on our own. Which is not wrong.
If you look at the short term (those 2 years), it’s easy to outperform robo advisors. But they were missing the whole point of why we are using robo advisors. When the investment time horizon starts to stretch out, it gets more difficult to outperform robo advisors. You are up against a diversified portfolio of ETFs that get rebalanced occasionally according to market conditions after all. As long as we remain objective and let the robo advisor do its job, it can prove its worth given time.
The next 6 months until end 2019 got better for us as the returns on our StashAway accounts increased. But the real test came this year in the 1st quarter of 2020. I have always said that the true test for robo advisors lie in their first major bear market. And whether they failed, survived or thrived during this period of time. In end Mar 2020, our StashAway accounts were at their biggest negative returns since the beginning. It felt like the past 3 years have gone to waste.
This was also the turning point of us. Because it was right at this lowest moment that we decided to raise our monthly investments in StashAway. We were even manually transferring larger sums of money into it as the markets fell. From there, the rebound in the markets since Apr 2020 further increased our returns up to this point. It’s coming to about 3.5 years so I would still consider this short term. But it has already been an exciting journey. To be honest, even with the higher returns on our StashAway accounts, they are not tough to beat if you had invested yourself.
The important point to remember is how minimal the effort was for us to achieve these higher returns with our StashAway accounts. The monthly funds transfers were automated and we only manually transferred cash into them when there are market dips and falls. Our main concern was always whether they can be profitable and remain in operations for the medium to long term for the results to truly show themselves. After all, Smartly (probably the 1st robo advisor locally) failed to survive and people had to exit their investments at a loss if they had waited too long to react.
While these are still early days for StashAway, I would say they have passed their 1st major test well. They have proven themselves to be a real contender for convenient investing with a decent return. Simple and fuss-free at a price. You have to decide whether the costs (fees paid) are worth it. But for now, I’m sticking with them. As long as they continue to prove themselves, I will be supporting them. I feel obliged to say that this is not a sponsored post for StashAway. I have a referral link on my blogpage showing their portfolio performance overview just to get a management fee waiver if you decide to sign up and fund your account. But I don’t actively promote them on my blog. If they are good, they will find their own way to attract customers.
Hi
You wrote so much but there is no mention how much gain in percentage from Stashaway.
Hi Mini,
As I have mentioned in my post, you can refer to my blogpage that shows my StashAway portfolio performance. You can go ahead to calculate the percentage gain yourself using the information available if you are interested.
I think its mainly because you manually increased your contributions in lump sums during the early part of the year, that’s why the SA account is positive now. It would be the same as a DIY portfolio of low cost ETFs.
But I also think psychologically, it is mentally easier to contribute into SA than to the DIY portfolio in such times, since for the latter, you have to overcome your own feelings of wanting to time the market.
But thanks for your sharing about your experience with SA.
No worries. Yup, I manually contribute when there are market dips and falls. When the extent of the drop becomes significant, I increase the automatic monthly contributions as well. I agree that it is easier to contribute into StashAway then to make manual investment purchases. It’s a big psychological difference between performing a funds transfer on your online banking account versus actually logging into your trading account to buy the ETFs.