StashAway Malaysia Review: Is This Robo Advisor Worth Using?
- How does StashAway work?
- Is it safe to invest through StashAway?
- What does StashAway invest in?
- How does StashAway re-optimise your portfolios?
- How have StashAway’s portfolios performed?
- StashAway fees
- What we like about StashAway
- Things to consider
- StashAway alternatives
- How to open a StashAway account
Looking for a robo advisor to help you start your investing journey?
StashAway is a good option if you want to start investing internationally. It automatically picks investments for you, helps you quickly set up financial goals and estimates how you can reach them. It has competitive fees, no minimum investment amount and a sleek user interface.
However, investing with StashAway can mean giving up a lot of control over your portfolio, as you can’t pick individual investments. You also can’t opt out if StashAway decides to change the allocation of investments in your portfolio.
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How does Stashaway work?
StashAway is a robo advisor that invests your money in exchange-traded funds (ETFs). Each ETF is like a collection of investments like stocks, bonds, precious metals or other assets.
Like other robo advisors, StashAway makes you complete a short assessment before investing. You’ll be assigned a risk profile based on your assessment results. This helps StashAway figure out if it should recommend lower-risk or higher-risk portfolios to you.
StashAway uses an internal measure of risk, the StashAway Risk Index (SRI). If you’re a more conservative investor, StashAway will recommend a portfolio with a lower SRI, though you can still choose a different risk level outside its recommendation. But depending on your assessment results, you may not be able to choose the highest-risk portfolios.
You can create portfolios to meet specific goals, such as retirement or buying a new home. StashAway will suggest how much you may need to invest every month to meet your goal, although you can choose to invest however much you wish. You can also create portfolios for general investing, without specifying any goals.
As you invest, StashAway may periodically re-optimise your portfolio in reaction to economic trends.
Is it safe to invest through StashAway?
StashAway is licensed under the Securities Commission Malaysia, so it’s perfectly legal.
But what if StashAway closes down? Well, when you deposit money into your StashAway portfolio, the funds are kept in a Citibank trust account. Then, the purchased assets go to a custodian account through Saxo Capital Markets. This means that StashAway doesn’t actually hold your money or investments – so if the platform shuts down, you’ll still have access to them.
What does StashAway invest in?
Here’s the full list of ETFs that StashAway invests in.
StashAway has 12 portfolios based on different risk levels ranging from 6.5% SRI to 36% SRI. But what do these numbers mean? Basically, an SRI of, say, 10% means that there’s a 99% probability that the portfolio won’t lose more than 10% of its value in a year.
Here are examples of its lowest and highest risk portfolios:
Lowest-risk portfolio (6.5% SRI)
|Government bonds||iShares International Treasury Bond ETF (IGOV)||20%|
|Government bonds||iShares TIPS Bond ETF (TIP)||15%|
|Government bonds||iShares J.P Morgan USD Emerging Markets Bond ETF (EMB)||4%|
|Corporate bonds||iShares Floating Rate Bond ETF (FLOT)||20%|
|Fixed income||Vanguard Total International Bond ETF (BNDX)||20%|
|Commodities||SPDR Gold Trust (GLD)||12%|
|International equities||iShares MSCI Japan ETF (EWJ)||8%|
Highest-risk portfolio (36% SRI)
|International equities||iShares MSCI Australia ETF (EWA)||10%|
|International equities||KraneShares 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 Staples Select Sector SPDR Fund (XLP)||16%|
|Corporate Bonds||iShares Core U.S. Aggregate Bond ETF (AGG)||8.5%|
|Real Estate||Vanguard REIT ETF (VNQ)||7.7%|
|Real Estate||Vanguard Global ex-U.S. Real Estate Index Fund ETF (VNQI)||12.3%|
|Commodities||SPDR Gold Trust (GLD)||4.5%|
How does StashAway re-optimise your portfolios?
StashAway automatically re-optimises your asset allocation when it identifies a change in the economic cycle. It uses a fancy-sounding framework, the Economic Regime-based Asset Allocation, to do so. For example, in the latest re–optimisation in July 2021 (at the time of writing), StashAway has maintained or increased exposure to China tech, as well as made new allocations to assets that protect against inflation. When an optimisation happens, the platform will apply the changes to your portfolio – and you can’t opt out of it. Since its launch in 2017, it’s re-optimised its portfolios four times.
Some users may have gripes with this, as it sounds similar to active management – an investment strategy that buys and sells individual investments to try to get better returns than the market. This strategy usually underperforms compared to just buying and holding an ETF for a long period of time.
However, StashAway notes that it invests passively when it comes to individual stocks, and takes an active approach when it comes to deciding which market to invest in. But we don’t know yet whether this strategy will be effective in the long term, as StashAway has only been around for a few years.
How have StashAway’s portfolios performed?
You can check out the performance details of each portfolio on the StashAway website.
Here’s how the lowest-risk and highest-risk portfolios have performed since StashAway’s launch in July 2017:
- StashAway Risk Index 6.5% – 3% annualised return
- StashAway Risk Index 36% – 17.6% annualised return
However, existing StashAway investors may have noticed that their higher-risk portfolios have experienced dips in performance this year. This is partly due to StashAway’s allocation to the KraneShares CSI China Internet ETF, which has plunged thanks to China’s regulatory crackdown on tech companies. StashAway expects these stock prices to recover in the long-term.
But if you’re looking for a robo advisor to invest with, try not to get caught up with short-term investing performance. It’s hard to evaluate a robo advisor solely based on its daily or monthly (or even yearly) performance, as these portfolios are typically built with the long term in mind.
StashAway’s fees range from 0.2% to 0.8%, depending on your portfolio size. The bigger your portfolio, the lower your annual fee.
|Total investment||Annual fee (including GST)|
|Any additional amount above RM50,000, up to RM100,000|
|Any additional amount above RM100,000, up to RM250,000|
|Any additional amount above RM250,000, up to RM500,000|
|Any additional amount above RM500,000, up to RM1,000,000|
|Any additional amount above RM1,000,000, up to RM3,000,000|
|Any additional amount above RM3,000,000|
This doesn’t include the annual expense ratio charged by the ETFs themselves, which is approximately 0.2% p.a. On top of that, there’s a currency conversion fee of 0.1% when you deposit your money, as StashAway converts your ringgit into USD to invest.
StashAway’s fees are fairly competitive. Of course, to get the best rates, you’ll need to invest a few million, which is out of reach for most Malaysians. But even at lower tiers, it’s slightly cheaper than competitors like MyTHEO and Wahed Invest. It’s also a lot cheaper than investing in unit trusts – these charge annual fees of 0.5% to 2.5% and upfront fees of 1.5% to 5%.
- Competitive fees. StashAway’s fees start at 0.8% per year, which is lower than some competitors. It’s a cost-effective way to start investing globally.
- Easy access to international stocks. To invest internationally, you’d either need to sign up for an international brokerage, or invest in international ETFs or unit trusts through local institutions. This can be intimidating to a complete beginner – StashAway makes it a bit easier to start investing internationally.
- Goal-based investing. StashAway makes it easy to invest for your financial goals. It can help you estimate how much you may need to reach your goal, and how much you may need to invest every month to reach it.
- Good UI, user-friendly app. Financial apps can sometimes be slow and clunky, but StashAway’s platform makes signing up and investing super easy.
- Lots of free learning resources. StashAway publishes market commentary, articles on how to invest and insights into how it makes certain investing decisions. It even offers free investing webinars! These resources make it easier to learn and grow as an investor.
- Access to a cash management portfolio. Signing up to StashAway also gives you access to StashAway Simple, which is useful for getting interest on your spare funds.
Things to consider
- Cannot opt out of re-optimisation. Investing with StashAway means giving up a lot of control over your portfolio. A re-optimisation may change allocation in your portfolio, but you can’t opt out if you disagree with it.
- Dividend withholding tax. When you invest in US funds, your dividends will be subject to a 30% withholding tax. This tax is applicable when you invest in US securities as a non-US citizen, not just when investing through StashAway. But it’s worth noting, as StashAway has a high exposure to the US (almost half of its highest-risk portfolio is invested in the US). However, StashAway is able to claim back some of these taxes for you.
- Currency fluctuation risk. StashAway portfolios are denominated (i.e. held) in either USD or GBP. When you deposit funds in StashAway, it converts your MYR into either USD to GBP to purchase the ETFs that make up your portfolio. This means that your investments will be impacted when the USD or GBP rises or falls against MYR. For example, if the USD rises against the MYR, your portfolio will now be worth more in ringgit. But if the USD falls against the MYR, your portfolio will be worth less in ringgit. However, currency fluctuations risks aren’t specific to StashAway – it’s something you’ll have to keep in mind every time you invest in a foreign currency.
- Not Shariah-compliant. The ETFs that StashAway invests in are not strictly Shariah-compliant. However, the underlying fund in StashAway Simple is Shariah-compliant.
Interested in passive investing, but not keen on StashAway? You could try these other options.
If you want to invest through other robo advisors:
Robo advisors Akru, MyTHEO and Wahed Invest are good alternatives to StashAway, as they also invest in international ETFs. But if you prefer your robo advisor to invest in unit trusts instead, consider BEST Invest or Raiz. Check out our robo advisor comparison for more information.
If you want to go the DIY route:
Instead of investing through a robo advisor that invests in ETFs, you could just directly invest in ETFs yourself. You could open an international brokerage account (for example, with Interactive Brokers or TD Ameritrade) and invest in the same ETFs that StashAway invests in.
If you want to invest through a local brokerage instead, Bursa Malaysia has a range of ETFs that could give you exposure to international equities. For example, you could invest in US equities through the MyETF Dow Jones U.S. Titans 50 or focus on US tech companies through the TradePlus NYSE FANG+ Daily (2x) Leveraged Tracker. You could also invest in Chinese equities through the Principal FTSE China 50 ETF or TradePlus S&P New China Tracker.
Of course, when you go the DIY route, you’ll be responsible for researching every ETF you’ll be investing in. You’ll also need to rebalance your investments periodically on your own.
How to open a StashAway account
It’s easy to get started with StashAway. Here’s how:
- Use this link to get 50% off your management fees for your first six months.
- Click on “Invest Now” or “Get Started”.
- Register a new account.
- Provide personal information (so StashAway can verify your identity and customise your portfolio).
- Wait for your identity to be verified, then start investing!