Which Robo Advisor Should You Use In Malaysia?

Which Robo Advisor Should You Use In Malaysia?

You should start investing.

You know this, but the thought of it scares you. You have no idea how to pick the right investments, you don’t trust yourself with large financial transactions and you suspect that investing involves a certain proficiency in math that you don’t have.

If this sounds familiar, then a robo advisor could be what you need.

What is a robo advisor?

A robo advisor is a digital platform that uses algorithms to automate your investment portfolio. It automatically creates a portfolio for you based on your investing goals and risk tolerance, and periodically rebalance your portfolio.

Typically, a robo advisor uses your money to invest in exchange-traded funds (ETFs), which are groups of stocks, bonds or other investments.

But each robo advisor implements a different investing methodology – the underlying investments and allocation of your portfolio will differ based on the robo advisor platform you invest in.

What are the advantages of investing with a robo advisor?

  • Passive investing. If you’re not comfortable making investment decisions on your own, or you don’t want to (or can’t) spend a lot of time researching, monitoring and rebalancing your portfolio, then robo advisors could be a good alternative.
  • Diversification. Being diversified (i.e. having many types of investments versus just one type) helps you spread your risk. This means that if a particular investment in your portfolio performs badly, you won’t be greatly affected as you have other types of investments.
  • Avoid emotion-based investing. Some investors panic and withdraw their money in a downturn or pump in more cash when the market is rising. But timing the market is incredibly hard and can lead to smaller returns in the long run. With a robo advisor, you can take a ringgit cost averaging approach by investing a fixed amount every month, avoiding emotion-driven impulses to buy and sell based on market sentiment.
  • Low fees. Robo advisors charge low management fees that are typically below 1% a year.. By contrast, if you invest in unit trust funds you may need to fork out 0.5% to 2.5% per annum. Some unit trust funds also charge up to 5% upfront in sales charge, and another 5% when you redeem your investment value.

What are the drawbacks of investing with a robo advisor?

  • Limited customisation. Robo advisors allow you to set certain things like your risk profile or investing goals, but that’s about it. You generally can’t tinker with the investment methodology, choose (or exclude) individual investments in your portfolio or adjust your exposure towards certain geographical regions.
  • Non-transparent investing methodology. If you’re a savvy investor, you may be interested in the specific criteria a robo advisor uses to select ETFs, or how a robo advisor chooses to rebalance your portfolio. However, this information is not always made available.
  • Dividend withholding tax. Some robo advisors invest heavily in securities listed in the US. However, as a foreign person buying US stocks, your dividends will be subject to a 30% withholding tax, although your robo advisor platform may be able to seek partial reimbursement of these taxes for you.

What robo advisor platforms are there in Malaysia?

While they’ve been around since 2008, the first robo advisor launched in Malaysia only three years ago. Singapore-based StashAway launched in 2018, while MyTHEO and Wahed Invest entered the market a year later. In addition, we now have other players: homegrown robo advisor Akru, Bank Islam Malaysia’s BEST Invest, Kenanga Investment Bank’s KDI Invest and Raiz.

Here’s how these robo advisors compare against each other at a glance:

PlatformLaunchedMethodologyMin initial investmentAnnual fees
Akru2020Invest in an intelligent portfolio of diversified global low-cost ETFsRM00.2% to 0.7%
BEST Invest2020Applies robo-intelligence and big data technology to suggest a portfolio of diversified Shariah-compliant unit trust investmentsRM100.5% to 1.8%
KDI Invest2022It allows for AI-assisted investment in a range of selected ETFs listed in the US which aligns with user preferencesRM00.3%-0.7% for investments above RM3000
MyTHEO2019Uses proprietary algorithms to create functional portfolios that incorporate risk-based investing and “smart beta”RM1000.5% - 1%
Raiz2020Uses algorithms to determine your risk profile to construct a portfolio of Amanah Saham Nasional Berhad (ASNB)’s unit trust fundsRM5RM1.5 a month (under RM6,000) or 0.3% (RM6,000+)
StashAway2018Uses proprietary investment strategy that reacts to economic fundamentalsRM00.2% - 0.8%
Wahed Invest2019Optimises the investor's portfolio with Shariah-compliant investments using modern portfolio theoryRM1000.39% - 0.79%

Comparison of robo advisor fees

Robo advisorAnnual feesAnnual fund expenseCurrency conversion fee
Akru0.2% to 0.7%ETFs: 0.03% - 0.13%
Unit trust: 0.3% - 0.5%
BEST Invest-0.5% to 1.8%-
KDI Invest0.3%-0.7% for investments above RM3000ETFs: 0.2% to 0.4%

MyTHEO0.5% - 1%0.04% to 0.80%0%
RaizRM1.50 a month (under RM6,000)
or 0.3% (RM6,000+)
StashAway0.2% - 0.8%0.04% to 0.80%0.08%
Wahed Invest0.39% - 0.79%0.50% - 0.92%-

Most of these robo advisors charge fees according to your portfolio size – the larger your portfolio, the less fees you pay. BEST Invest is an exception – its fees are included in the annual management fees of its unit trust fund investments, which do not decrease with your portfolio size.

Besides the fees of the robo advisor itself, there are also fees associated with the underlying investments that make up your portfolio. Robo advisors that invest in unit trust funds incur higher fees, while those that invest in ETFs incur lower fees.

Although fees can make a huge difference to your portfolio over time, you shouldn’t pick a platform solely on who charges the least. You should also consider how the platform chooses assets to invest in, how it rebalances your portfolio and whether it provides any other services that could improve your returns.

Portfolio allocation

Here are examples of the most aggressive portfolios of each platform:

Akru (Portfolio 10)

EquityiShares Core MSCI Emerging Markets ETF10.45%
EquityVanguard 500 Index Fund ETF54.15%
EquityiShares Core MSCI EAFE ETF30.40%
BondVanguard Total Bond Market Index Fund ETF1.80%
BondVanguard Total International Bond Index Fund ETF2.20%
akru asset allocation pie chart
Akru offers ten portfolios, ranging from Portfolio 1 (lowest-risk) to Portfolio 10 (highest-risk). It’s highest-risk portfolio allocates 95% to equities, 4% to bonds and 1% to cash. A major portion (54%) of that is invested in US equities, while 41% is invested in international stocks.

According to backtested estimates, Portfolio 10 would have delivered a compound annual growth rate (CAGR) of 10.32% from January 2014 to June 2021. However, this isn’t an indicator of future performance.

BEST Invest (“Aggressive Growth-Oriented Investor” portfolio)

EquityBIMB-Arabesque Asia Pacific Shariah-ESG Equity Fund30%
EquityBIMB-Arabesque I Global Dividend Fund 160%
SukukBIMB ESG Sukuk Fund Class A10%
BEST Invest invests in five types of unit trust funds – three equity funds, a sukuk fund and a money market fund. All its investments are Shariah-compliant.

In 2020, we used Morningstar to estimate its geographical allocation:

Greater Europe9.41%
United Kingdom0.79%
Western Europe - Euro4.34%
Western Europe - Non-Euro3.54%
Middle East / Africa0.74%
United States37.09%
Central & Latin America0.84%
Greater Asia50.6%
Emerging 4 Tigers8.67%
Emerging Asia - Ex 4 Tigers9.18%
Over a third of BEST Invest’s aggressive portfolio is invested in the United States, while a quarter is invested in Japan. If you’ve been investing mostly in local securities, this portfolio could help you spread your risk globally.

However, it’s worth noting that both the BIMB-Arabesque Asia Pacific Shariah-ESG Equity Fund and BIMB-Arabesque I Global Dividend Fund 1 have underperformed benchmarks since their inception. As of June 2021, they had a three-year cumulative performance of -1.09% and 11.96% respectively.

KDI Invest (US Exchange Traded Funds – US ETFs)

KDI’s investment platform is AI driven, needing little to no human involvement in its management. Most robo-advisors in Malaysia right now utilise a mix of AI and input from a fund manager, making KDI’s offering a rather unique one.

The KDI Invest portfolio invests in ETFs listed on the stock exchanges in the USA. This is mainly because the USA stock exchanges offer the most liquid, deepest and widest range of ETFs covering asset classes across the world, compared to ETFs listed in other countries. This allows investments to get access to global investment trends.

KDI goes the extra mile to ensure currency conversion costs are as low as possible. Saxo Capital Markets, KDI’s appointed broker, has committed to fixing the cost of currency conversion at 20 basis points (about 0.2% rate) linked the current foreign exchange rate.

KDI is also completely free for investments below RM3000. For investments above RM3000, clients are charged with a management fee between 0.3%-0.7%. As such, this makes KDI a very accessible option for Malaysians.

MyTHEO (“Growth” portfolio)

iShares MSCI Germany ETF (EWG)3.34%
iShares MSCI Hong Kong ETF (EWH)6.57%
iShares MSCI Japan ETF (EWJ)14.76%
iShares MSCI Singapore ETF (EWS)3.84%
iShares MSCI Taiwan ETF (EWT)3.81%
iShares MSCI United Kingdom (EWU)8.27%
iShares MSCI Frontier (FM)4.21%
Invesco QQQ Trust (QQQ)20.96%
iShares MSCI USA ESG Select ETF (SUSA)5.15%
Vanguard FTSE Pacific ETF (VPL)9.10%
Vanguard Value ETF (VTV)19.84%
MYTHEO asset-allocation pie chartMyTHEO’s most aggressive portfolio setting is almost entirely made up of equities. Slightly less than half of that (45%) goes to US stocks, while 54% goes to international stocks. Big portions of that are made up of specific regions, such as a 14.76% allocation to Japanese equities and 6.57% to Hong Kong equities.

According to backtested results, this portfolio has a CAGR of 12.32% from January 2013 to June 2021. However, this doesn’t necessarily reflect the returns you would have gotten with MyTHEO, as the robo advisor may change its selection or allocation of its underlying investments.

Raiz (Aggressive portfolio)

Malaysian equitiesASN Equity 3 Fund80%
Malaysian mixed assets (conservative)ASN Sara 1 Fund20%
Raiz’s highest-risk portfolio is only made up of two unit trust funds from Amanah Saham Nasional Berhad (ASNB) that invest locally. These funds are not considered Shariah-compliant by the Securities Commission of Malaysia, as they invest in Maybank, which is considered a non-Shariah-compliant stock. However, Malaysian Islamic councils consider these funds ‘harus’ or permissible.

As of July 2021, ASN Equity 3 has a 10-year annualised return of 3.00%, while ASN Sara 1 has an annualised return of 5.17% in the same period.

Raiz is the only robo advisor that allows you to automatically invest spare change from everyday purchases. Here’s how it works: you link a spending account with Raiz, which will be monitored for transactions. If you make a transaction – say, RM40.20 for petrol – Raiz will round up the transaction and invest the RM0.80 difference.

At the time of writing, Raiz only allows you to connect your Maybank account to invest your spare change, but you can use other bank accounts to fund regular investments.

StashAway (Highest-risk growth portfolio – 36% Risk Index)

International equitiesiShares MSCI Australia ETF (EWA)10%
International equitiesKraneShares CSI China Internet ETF (KWEB)20%
Equity sectors (US)iShares Core S&P Small Cap ETF (IJR)10%
Equity sectors (US)Energy Select Sector SPDR Fund (XLE)10%
Equity sectors (US)Consumer Stapes Select Sector SPDR Fund (XLP)16%
Corporate BondsiShares Core U.S. Aggregate Bond ETF (AGG)8.5%
Real EstateVanguard REIT ETF (VNQ)7.7%
Real EstateVanguard Global ex-U.S. Real Estate Index Fund ETF (VNQI)12.3%
CommoditiesSPDR Gold Trust (GLD)4.5%
StashAway’s highest-risk portfolio is largely allocated in the US (45.7%), China (20.4%) and Australia (10.8%). Notably, 20% of its portfolio is invested in KraneShares CSI China Internet ETF, which recently plunged amid China’s regulatory crackdown on tech companies.

According to backtested results, this portfolio has a compound annual growth rate (CAGR) of 8.27% from January 2014 to June 2021. However, this won’t reflect the returns you would have gotten with StashAway, as the robo advisor adjusts the selection or allocation of its underlying investments in response to economic conditions.



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Wahed Invest (“Very aggressive” portfolio)

Malaysian stocksMyETF MSCI Malaysia Islamic Dividend20%
US stocksWahed FTSE USA Shariah ETF65%
SukukRHB Islamic Bond Fund12.5%
Wahed Invest’s most aggressive portfolio invests in three securities, all of which are Shariah-compliant.

Of all the robo advisors listed, Wahed currently has the largest exposure (65%) to the US stock market. According to its own statistics, if you had invested RM11,148 on April 30, 2011 in this portfolio, it would have grown to RM31,694 by April 28, 2021. That’s an annualised return of around 11%.

On the other end of the risk scale, Wahed’s “very conservative” portfolio invests 90% in RHB Islamic Bond Fund and leaves another 10% in cash. We’re not sure if it’s worthwhile signing up for Wahed if you plan to use the “very conservative” portfolio. It seems slightly more cost-effective to invest in the unit trust fund directly through a platform like Fundsupermart, as you won’t have to pay Wahed’s platform fees.

Which robo advisor should you pick?

The best robo advisor for you could boil down to these investing preferences:

  • BEST Invest: if you want to invest in Shariah-compliant unit trust funds
  • StashAway, Akru and MyTHEO: if you want a globally diversified portfolio that invests in low-cost ETFs
  • KDI Invest: if you want to focus your investments on US ETFs
  • Raiz: if you want to invest locally in ASN funds, or if you want to automatically invest your spare change
  • Wahed Invest: if you want to invest in Shariah-compliant securities that diversify locally and in the US
These suggestions are based on each platform’s most aggressive portfolio settings, so they may only apply to you if you have a high risk tolerance. However, each platform allows you to adjust the risk profile if you are a more conservative investor, which will affect your portfolio allocation. Regardless of your risk profile, we recommend that you visit each platform’s website and learning pages to find out more before making a decision.

If none of these platforms appeal to you, you could even go the DIY route. This means that you’ll have to sign up for one of these platforms, look at their portfolio allocations and replicate them yourself by buying individual ETFs or unit trust funds.

A robo advisor removes a lot of this friction – you can construct a complete portfolio with much less money, without having to manually calculate how much of each security you need to buy or rebalance your portfolio yourself. It also uses algorithms to respond to market conditions.

If you’ve been putting off investing because you find it scary, and if you value convenience over everything else, then a robo advisor could be what you need.

This article was first published in February 2020 and has been updated for freshness, accuracy and comprehensiveness.

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