News

Demand rising for non-traditional investment platforms

StashAway makes its mark as Malaysia’s 1st digital wealth manager after getting its capital market services licence from SC

By MARK RAO

Online trading and investment platforms are slowly gaining traction in Malaysia as the general investors continue to find new ways to manage and increase their wealth while navigating the volatility in various markets.

One of the prominent platform is StashAway, which made its mark as Malaysia’s first digital wealth manager when it secured a capital market services licence from the Securities Commission Malaysia (SC) in November last year.

The robo-advisory firm signed up over 5,000 registrants when it was launched the same month and is expected to match its larger base in Singapore.

Country manager for Malaysia Wong Wai Ken said demand will be driven by consumers who would invest a portion of their high cash holdings in non-traditional and personalised investment products.

“As a percentage of gross financial assets that are in bank deposits amounts to 43% (in Malaysia), it is likely that new investors who have kept their money in cash or fixed deposits wise up and see our platform as a simple way to grow their wealth.

“We are also seeing investors leave their traditional unit trusts as they demand personalised investments with a multi-asset view,” Wong told The Malaysian Reserve (TMR).

He said the move would assist investors in mitigating the swings and volatility in financial markets which can be a daunting task, especially for first-time retail investors
trying to make sense of conflicting headlines.

StashAway co-founder and CIO Freddy Lim said the company enables investors to focus on their long-term investment goals instead of reacting to market and media noise.

“Firstly, StashAway offers individual investors portfolios that are tailored to the appropriate level of risk they should take based on their financial situation, investment horizon and risk preferences.

“Secondly, as the technology that runs StashAway’s intelligent investment framework makes decisions based on macroeconomic data points, investor’s asset allocation is based on economic fundamentals and not noise created by financial markets,” he said.

He added that the system allows StashAway users to navigate short-term volatility to achieve their long-term financial goals.

With low entry cost, management fees set at 0.2% to 0.8% per annum, and no sales charges and minimum balance, StashAway is providing an affordable alternative for the public looking to gain access to financial markets.

The platform’s users can choose from 31 different portfolios with the most conservative exposed to 55% protective assets while the highest risk portfolio has a 100% exposure to growth assets.

Investments are concentrated in fractional shares and exchange-traded funds (ETFs).

eToro, touted as the world’s leading social trading network, adopts a different approach which allows first- time investors to interact with seasoned traders and exchange know-ledge via a shared platform.

Its head for Southeast Asia Paul Henry Familiaran said the platform’s disruptive nature is democratising the traditional trading and wealth management space to the benefit of users who find their services simple and transparent.

“Currently, we see that the platform is popular with traders of a younger demographic who are very tuned in to current world events and have a sharing mindset,” he told TMR.

“We believe that we are able to meet the needs of this investing group through the social aspect of our platform, which allows users to share their trading strategies.”

eToro, which is also licensed in the US, the UK, Cyprus and Australia, provides a range of online trading and investment products to millions of registered users globally, including equities, commodities, ETFs and cryptocurrencies.

However, while everything looks good on paper, a major stumbling block in the Malaysian market is the worrying lack of sufficient financial literacy when compared to developed markets.

Wong said findings indicate that less than half of Malaysians understand concepts such as compound interest and diversification, and only 40% of the population consider themselves financially ready for retirement.

He said StashAway intends to be part of the solution in addressing this issue by focusing on investor education.

“Investors and potential investors alike have access to a range of in-person seminar interactions to learn about saving and investing,” he said, adding that StashAway will continue to expand its education offering in this respect.

He said StashAway’s digital platform makes it easy for all categories of investors to build a savings and investment plan via its emphasis on monthly savings, which capitalises on dollar-cost averaging and low-cost entry into capital markets

Dzul

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