Digital wealth manager StashAway has introduced a flexible option that gives investors more control over their investments by allowing them to customise their portfolios instead of relying on the traditional robo-advisory model of artificial intelligence to assess risk and pick funds on their behalf, the company said on Tuesday.
Flexible Portfolios gives investors the opportunity to choose their own asset classes, decide their financial allocations and change them at any time, StashAway said.
“We really value feedback from our investors and many were keen to create or customise their own portfolios according to their risk appetites,” said Joseph El Am, deputy general manager of StashAway Mena.
“We’re excited that our clients are becoming more and more savvy as they invest with us and so we’re pleased to enable them to have a say while we still deliver on two of our core values: investment intelligence and risk management.”
Robo-advisers are digital investment platforms that calculate an investor’s risk tolerance based on a series of questions.
Using automated algorithms, they then assign investors a tailored investment portfolio of exchange-traded funds or index funds. Typically, they charge lower fees compared with traditional financial advisers and wealth managers.
Retail investors are increasingly seeking direct access to markets with the help of technology, leading to a surge in popularity for zero-commission trading apps such as Robinhood, eToro and Interactive Brokers, as well as robo-advisers in the UAE including Sarwa, StashAway and Baraka.
Demand for trading and investment apps accelerated during the Covid-19 pandemic owing to monetary easing by the US Federal Reserve and other central banks around the world, giving novice day-traders more money to invest during pandemic lockdowns.
Although the US is the leading market for robo-advisers, they are growing in popularity in the UAE, with assets under management projected to rise 19.8 per cent to $3.28 billion in 2026, from $1.59bn this year, according to market and consumer data specialist Statista.
StashAway investors will be able to choose a range of exchange-traded funds that cover more than 35 asset classes under the Flexible Portfolio option, which will also be fee-free for the first year.
These include emerging markets, real estate investment trusts, gold, energy and government bonds, among others.
StashAway will also calculate the potential downside to ensure that investors know how much risk they are taking on as they create their portfolio and will alert investors when the risk level changes, it said.
“This new offering adds to StashAway’s drive for innovation in the industry to provide an intelligent, convenient and less expensive alternative to traditional wealth management providers,” it said in the statement.
Founded in 2016 in Singapore, StashAway expanded its operations to the UAE in November 2020 to tap into a growing segment of affluent investors looking for low-cost ways to build their wealth.
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
COMPANY%20PROFILE
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Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
