OCBC RoboInvest – a roboadvisor available on your banking app and it actually picks stocks

OCBC has launched 2 new thematic portfolios, Electric Vehicle and Cybersecurity, in its roboadvisory service OCBC RoboInvest.

In fact, OCBC RoboInvest now offers a total of 36 portfolios and with this wide selection, I am sure you will find something that you really want to invest in.

Yes, there have been a plethora of roboadvisors available in Singapore. You might find it hard to tell the difference between them and may even suffer from the paradox of choice. But I think these are small issues and the positives of choice outweigh the negatives. The important aspects such as lower fees, better product and performances come with the competition.

So fret not, I am here to help you understand what OCBC RoboInvest is and what you can do with it. You’ll be able to decide for yourself if this is suitable for you.

The key difference between OCBC RoboInvest and other roboadvisors

Most of the roboadvisors use ETFs or unit trusts to build portfolios for clients. OCBC RoboInvest does that too, and plenty more – they offer portfolios that hold individual stocks. Personally, I think fees are more justified if the advisor selects individual stocks rather than funds because more effort, knowledge and experience is required.

These stock picks are not based on any equity index but are selected by a proprietary system developed by OCBC. There are over 60 quantitative factors processed by the RoboInvest algorithms across Quality, Value, Momentum, Growth, and Volatility (aka Factor Investing).

The algorithm does three major things. First, it identifies the dominant factors that are in play. Second, it recommends changes to the portfolio holdings. Third, it suggests changes to the weightage.

But the algorithm doesn’t solely decide the changes. The OCBC investment managers have to verify the recommendations and approve them before the trades are executed. This oversight is important because most of us do not trust machines fully.

RoboInvest currently offers these 25 portfolios that invest into individual stocks and their corresponding past 1-year return (as of 30 Sep 2021):

• US Financials +80.65%
• Australian Financials +58.66%
• Hong Kong Tech +54.99%
• Mainland European Tech +46.57%
• Resurgent Industrials +30.09%
• Stable US Industrial Giants +29.43%
• UK Financials +26.76%
• Australian REITs +26.34%
• Dogs of the Dow +25.97%
• US Tech Leaders +23.77%
• Mainland Europe Healthcare +23.13%
• Singapore Stable Giants +22.39%
• Cloud Computing +21.58%
• Stable US Healthcare Giants +17.72%
• Stable US Consumer Giants +16.28%
• Stable Aussie Giants +16.13%
• Singapore Cash is King +14.15%
• Stable US Giants +13.09%
• Hong Kong Consumer +10.91%
• Singapore Stable REITs +7.82%
• Yummy +6.49%
• Asia Tech +6.42%
• Electric Vehicle (New)
• Cyber Security (New)

There are some interesting portfolios such as “Singapore Cash is King”, “Dogs of the Dow” and “Mainland European Tech” that are not common elsewhere.

“Singapore Cash is King” holds SGX-listed stocks that have positive free cash flow and provide regular dividends. Its top holdings are Singapore Post, Keppel Infrastructure Trust, Ho Bee Land, Starhub and Hong Leong and the one-year return was 14.15% as of 30 September 2021.

“Dogs of the Dow” is an investment strategy popularized in the 90s whereby you buy 10 Dow Jones Index components that have the highest dividend yields (also means lower share prices due to their inverse relationship). You can conveniently invest in this strategy without the need to manage the entire portfolio. The latest top holdings are Verizon, Merck, Coca-Cola, JP Morgan and Cisco. Its one-year return was 25.97% as of 30 September 2021!

“Mainland European Tech” has returned 32.41% in the past one year and most investors (at least in Singapore) would not have known about this great performance until now. Investors usually focus on US and Chinese companies in the tech sector and not Europe. I believe it is because Europe has more B2B tech rather than consumer tech. But it doesn’t make them less important considering they have world-leading semiconductor and electronics companies such as STMicroelectronics and Siltronic – both have fabs in Singapore! OCBC RoboInvest makes it easy for you to invest in such opportunities which might have been missed by most investors.

The downside of these direct stock investment portfolios is that a higher quantum is needed to invest in them. For example, you need to invest minimally HK$350,000 (~S$61,121) into the “Hong Kong Tech” portfolio. This is because individual stocks have minimum lot sizes or minimum number of shares to trade, which cascades to a larger portfolio amount. That said, the issue is more pronounced for Hong Kong, while the portfolios in other countries offer friendlier investment sizes. The minimum investment amount for “Dogs of the Dow” is at US$3,500 while “Singapore Cash is King” is at S$7,000. These are one-time lump sum investments.

OCBC RoboInvest also offers classic diversified portfolios at lower investment amounts if you prefer.

The good ol’ modern portfolio theory told us that one should diversify into stocks and bonds – more stocks if you can take higher risk and more bonds if you are conservative.

OCBC offers that and goes further by including commodities too, which improves the effectiveness of the portfolio in hedging during periods of high inflation.

The all-weather portfolio is worth highlighting too – this was a strategy made famous by hedge fund manager Ray Dalio, whereby you allocate in an asset based on its volatility instead of a fixed percentage. This portfolio enables you to minimize your risk while getting returns.

OCBC RoboInvest has 6 portfolios for different risk profiles:

	Equity	Fixed Income	Commodity	Cash
Defensive	19.72%	73.88%	4.93%	1.47%
All Weather	24.60%	49.2%	24.60%	1.60%
Cautious	34.49%	59.11%	4.93%	1.47%
Balanced	39.40%	49.25%	9.85%	1.50%
Growth	64.04%	24.63%	9.85%	1.48%
Aggressive	68.97%	14.7%	14.78%	1.47%

Invest as low as US$100 per month

There are 11 portfolios that you can invest in on a monthly basis:

• Cautious (min US$100)
• Defensive (min US$100)
• Balanced (min US$100)
• Growth (min US$100)
• Aggressive (min US$100)
• All Weather (min US$100)
• China Growth (min US$100)
• Impact Investing (min US$100)
• Precious Metals (min US$100)
• Future World (min US$100)
• Gen Z Winners (min US$1,000)

The first 5 portfolios (Cautious, Defensive, Balanced, Growth and Aggressive) are the classic portfolios built based on the Modern Portfolio Theory. Basically, it says you should have more bonds in your portfolio if you are cautious and more stocks if you are more aggressive.

Besides these, there are other thematic portfolios which you can invest monthly. “Gen Z Winners” is an interesting one which holds ETFs such as VanEck Vectors Video Gaming and eSPorts ETF and Amplify Online Retail ETF. It is a bet on our digital native generation’s new consumption patterns.

Overview of OCBC RoboInvest’s 36 Portfolios

Here is a table with the portfolio details (based on 20 Aug 2021) or you can view them on OCBC’s webpage:

Correct as of 20 Aug 2021	ETFs / Stocks	Lump sum / Monthly Investment	Min Investment	Risk Level
Electric Vehicle	Stocks	Lump Sum	US$5,500	Very High
Cyber Security	Stocks	Lump Sum	US$5,000	Very High
Asia Tech	Stocks	Lump Sum	US$6,000	Very High
China Growth	ETFs	Monthly	US$100	Very High
Gen-Z Winners	ETFs	Monthly	US$1,000	Very High
Cloud Computing	Stocks	Lump Sum	US$6,000	Very High
Future World	ETFs	Monthly	US$1,000	Very High
Precious Metals	ETFs	Monthly	US$100	Very High
Impact Investing	ETFs	Monthly	US$100	Very High
Singapore Stable REITs	Stocks	Lump Sum	S$5,000	High
Yummy	Stocks	Lump Sum	US$3,500	Very High
Stable Aussie Giants	Stocks	Lump Sum	A$2,000	High
Stable US Giants	Stocks	Lump Sum	US$3,500	High
Singapore Cash is King	Stocks	Lump Sum	S$7,000	High
Growth	ETFs	Monthly	US$100	High
Defensive	ETFs	Monthly	US$100	Low
Cautious	ETFs	Monthly	US$100	Low
Balanced	ETFs	Monthly	US$100	Medium
Aggressive	ETFs	Monthly	US$100	Very High
All Weather	ETFs	Monthly	US$100	Medium
Dogs of the Dow	Stocks	Lump Sum	US$3,500	Very High
Stable US Industrial Giants	Stocks	Lump Sum	US$3,500	Very High
Stable US Healthcare Giants	Stocks	Lump Sum	US$3,500	Very High
Stable US Consumer Giants	Stocks	Lump Sum	US$3,500	Very High
US Tech Leaders	Stocks	Lump Sum	US$4,000	Very High
US Financials	Stocks	Lump Sum	US$3,500	Very High
Resurgent Industrials	Stocks	Lump Sum	US$3,500	Very High
Stable Singapore Giants	Stocks	Lump Sum	S$8,000	Medium
Australian REITs	Stocks	Lump Sum	A$2,000	Very High
Australian Financials	Stocks	Lump Sum	A$3,500	Very High
Mainland European Tech	Stocks	Lump Sum	3000	Very High
Mainland Europe Financials	Stocks	Lump Sum	3000	Very High
Mainland Europe Healthcare	Stocks	Lump Sum	4000	Very High
UK Financials	Stocks	Lump Sum	?2,000	Very High
Hong Kong Tech	Stocks	Lump Sum	HK$350,000	Very High
Hong Kong Consumer	Stocks	Lump Sum	HK$350,000	Very High

Fee comparison

OCBC RoboInvest charges a flat fee of 0.88% on your investment value per year. It isn’t the cheapest roboadvisor in Singapore and may look high at the first instance when compared with the other offerings.

But we may get a different picture if we total up the costs. As mentioned in previous sections, OCBC RoboInvest has direct investments into stocks and there are no trading commissions, only the exchange fees. For example, SEC charges an exchange fee of 0.00221% of the transaction value every time a stock is sold (buying has no fees). The total cost of OCBC RoboInvest would be 0.88221% (assuming the portfolio has sold all stocks once within a year).

On the other hand, a competitor roboadvisor may charge a 0.6% annual fee and invest in ETFs that have annual fees of 0.4%. The total annual fee will come up to 1%. Hence, it is important to look at the total fee rather than just the roboadvisor fees. I believe some may cost more than what RoboInvest charges.

There are other intangible benefits too. You get the convenience of investing within the same OCBC Mobile Banking app if you are an existing OCBC customer. You also have the reputation of a big-name bank in Singapore to help you with your investment.

Invest right from your OCBC Mobile Banking app and receive market updates

The good thing about this RoboInvest service is that you can do it right off your OCBC Mobile Banking app. Being a major bank in Singapore, I believe a good number of readers have the app. It makes funding and withdrawal from the service easy and almost instantaneous – OCBC customers can directly debit their OCBC cash/savings accounts to pay for investments and automatically receive the money in their cash/savings accounts when the investments are sold. This is a big convenience that non-bank roboadvisors do not offer.

You just need to login to your OCBC Mobile Banking app and follow the steps below. Just 6 clicks!

For non-OCBC customers, you can conveniently open an account online without having to visit a branch. Using our Singapore government’s Myinfo would speed up your application process too.

As a RoboInvest customer, you will receive regular updates about the portfolio performances as well as market commentary. These would help you make better investment decisions.

To sum it up, I see 3 major advantages of OCBC RoboInvest.

Firstly, it has a wide variety of portfolios to choose from. You will be able to find something you like that is suitable for your investing profile.

Secondly, RoboInvest picks individual stocks using their proprietary system, instead of just following an index or ETFs. The fees are more justifiable and in fact, might be cheaper from a total cost perspective.

Thirdly, you can invest directly using the OCBC Mobile Banking app which makes it very convenient in terms of transaction speed as well as tracking of your overall finances.

This article is sponsored by OCBC but the views belong to the author. It should not be taken as investment advice.

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