Question 1

Why asset allocation instead of securities selection?

Accepted Answer

According to the mid-2016 SPIVA US Scorecard, 94.58% of US domestic equity fund managers who participate in active fund management have underperformed the relevant passive index benchmark in the past 5 years. In other words, only about 5% of active fund managers delivered positive returns against their benchmark. Data for other countries and time periods are comparable.

Not sure about you, but we didn't like the sound of those odds.

We don't engage in securities selection, and we refrain from using actively managed funds; instead, we build our customers’ portfolios with a carefully selected assortment of highly diversified, liquid and low-cost exchange-traded funds (ETFs). These index-tracking investment tools enable our customers to gain diversified, long-term exposure to a variety of asset classes and geographies.

Question 2

How does StashAway select ETFs?

Accepted Answer

StashAway chooses the best-in-class ETFs on your behalf. We chose the largest, most liquid, most tradable, and most cost-effective ETFs with the lowest tracking error to the index and a sufficiently long track record. We choose simple ETFs, which means they have no leverage or complex payoffs, and have no ETNs to avoid credit risk of issuer.

Question 3

Why don’t I just invest on my own?

Accepted Answer

When investing as an individual, there are minimum trade sizes and high transaction costs imposed on the account, and this makes investing as an individual cost-prohibitive. With StashAway, you will benefit from the constant monitoring, rebalancing, and re-optimisation that we provide. Moreover, StashAway is able to offer fractional shares to make your portfolio more precisely allocated, which is nearly impossible if you were to do it on your own.

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