Inflation is the hot topic today, with whispers of a possible recession. On top of that, the world faces geopolitical tensions while supply chain disruptions and rising prices of raw materials. All these add to the complexity of navigating financial markets to make sound investment decisions.
One of the findings of the Asean Consumer Sentiment Study 2022 by United Overseas Bank (UOB) published on Sept 19 was that Singaporeans seemed to be most worried about their finances among Southeast Asian countries.
The local bank found that 66% of Singaporeans were concerned about finances, some 10 percentage points (ppts) above the regional average of 55%. Among the survey respondents, 67% were worried about rising household expenses while 61% were concerned about their long-term commitments. Another 64% were uneasy about their decline in savings and wealth holdings and 74% about the impending increase in goods and services tax (GST) that is about to come into effect next year and inflation.
However, the bright spot comes from the rather strong and steady Singdollar that helps to offset some of the price increase on imports, while Singapore’s growing economy signals better employment prospects and income opportunities.
Nonetheless, there still has to be some form of strategy to invest in today’s landscape. This is where the UOBAM Invest mobile application comes in, developed by UOB’s wholly-owned subsidiary, UOB Asset Management (UOBAM).
The UOBAM Invest digital platform offers institutional-grade portfolio solutions to customers by leveraging UOBAM’s professional solutions and expertise. It has been recently upgraded in October, offering a suite of new features to better support users’ investing journey.
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UOBAM is the first regional asset management firm to offer a robo-adviser for corporate investors, while it also offers personalised portfolios for retail investors. For the latter, UOBAM’s award-winning robo-adviser includes an established portfolio recommendation process based on investors’ personalised inputs.
Investors are able to personalise their portfolio with the robo-adviser by creating up to 10 portfolios, taking into account different goals and how long they would like to invest for each goal. It also takes into consideration more savvy investors who prefer to have a choice in what they want to invest in and offers the option to diversify their investments in specific themes and trends. Another key component the robo-adviser takes into account is the investor’s risk profile.
For instance, a young working parent with two young children may opt to create three different investment portfolios to address different needs, such as retirement and the children’s education. The retirement portfolio may have a higher risk tolerance as there is still time on the parent’s side while the children’s education portfolio may have a lower risk, depending on their age.
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This is all then integrated with UOBAM’s in-house investment views, expertise and technology to generate instant, personalised and optimal portfolio recommendations. This ranges from the list of exchange-traded funds available for each targeted risk level to certain investment levers that help optimise the algorithm. UOBAM’s goal is to bring the benefits of its risk-based approach, which is trusted by institutional investors, to individual retail investors in a way that is highly customised to their personal circumstances.
“Through UOBAM Invest, we hope more retail investors can benefit from the simplicity, affordability and ease of using a robo-adviser, and have access to an established bank-backed asset management firm,” says Rachel Ong, head of digital business at UOBAM, adding that there is also no account opening or redemption fees incurred, opening up the investing opportunity to all. Investors also can start investing from as low as $1.00.
Standing out from the crowd
While there are many other robo-advisers in the market today. UOBAM is a name that is synonymous with being trustworthy. Not only is it backed by an established bank, it also carries over 35 years of institutional-grade fund management research, process and expertise.
However, there is a more important reason why UOBAM Invest bagged the award for the Best Robo-Advisory at the Global Retail Banking Innovation Awards 2022.
Instead of relying solely on algorithms that power the robo-advisors, UOBAM Invest also relies on a strong human touch to supplement and provide more information to investors to make better decisions. The UOBAM platform is designed to gain maximum advantage from the tight interaction between man and machine. Rather than using artificial intelligence or AI, the platform is based on the principle of “augmented intelligence”.
While the machine is crucial for performing complex calculations, delivering faster results, reducing human error and responding to triggers, human intervention is responsible for aligning portfolios to investors’ needs, setting rules, making sense of changes and defining investment boundaries.
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UOBAM says UOBAM Invest’s dynamic approach is driven by its proprietary investment research and analysis. A team of over 90 UOBAM investment professionals and partners based in nine countries across Asia allows it to make investment decisions that optimise investment risk and return. These are then constantly monitored and regularly reviewed by UOBAM’s various investment strategy and product committees.
In addition, UOBAM also engages a specialised investment solutions unit to oversee the UOBAM Invest portfolios. This unit is responsible for selecting and defining suitable asset classes for the portfolios within the platform; helping to design the algorithms that power the platform and inputting proprietary Capital Market Assumptions (CMAs) derived from UOBAM’s in-house research processes into the algorithm for portfolio optimisation.
The specialised portfolio team also implements investment constraints so the recommended portfolio solutions from the algorithm are aligned with clients’ investment goals and risk characteristics. The constraints also help select the appropriate investible universe and create a curated list of exchange-traded funds (ETFs) to deliver the targeted risk levels.
Meanwhile, UOBAM recognises that every investor is different and holds different risk tolerance levels. Hence, a “glide-path” formula is embedded within the UOBAM Invest platform. This formula is an overlay function that enables the platform to help slowly “glide down” the gradient of risky assets in an optimised manner towards the end of the investment horizon to maximise returns.
This allows investors to better fine-turn their portfolios. For example, if an investor’s risk profile is very aggressive, near the end of the investment horizon, the glide path will start to shift the asset allocation to less aggressive assets to help the invest protect and maximise returns.
“Investment portfolios need to be dynamic, to cater to each person’s evolving needs. Not only is each individual unique, but one’s priorities will also change with time,” says Ong.
Goal achiever
In such uncertain times, how can investors stay on track to achieve their investment goals?
Ong says regardless of the economic conditions affecting the market, or whether or not a robo-adviser is in the picture, consistent investing — or dollar cost averaging — is key in mitigating timing risks. Investors can then invest more when prices are low and invest lesser when prices are high.
“The year 2022 is very complicated for the markets. We have conflicting signals — strong jobs market signals and a possible mild slowdown while the stock market is pricing in a deeper recession. As a result, we encourage investors to stay cautious and take advantage of the market weakness by dollar-cost averaging and staying invested through these volatile times,” says Dharmo Soejanto, Chief Investment Strategist, UOBAM Digital Solutions, adding that this move helps investors reduce emotions in investing and to better focus on their investment objectives instead.
Hence with the markets being unpredictable and volatile, it is important to remember that it is not about timing the market that counts but the time in the market. This helps to avoid the pitfalls of emotional investing.
Moving forward, UOBAM intends to still introduce more features into the UOBAM Invest. “We are constantly monitoring and collecting feedback to enhance our app to improve users’ experience and offer more solutions that are aligned with our investors’ investment goals. Our investors can definitely look forward to an even more robust investment app in the months to come,” says Ong.
