My take on re-optimization of Stashaway

This my personnel take on the recent StashAway re-optimization change. It's not an affiliated post and is not a recommendation of investment. I did meet the team once and trust that their management team is passionate about offering great investment product to mass consumer. 

When I first started investing in StashAway, their portfolios seems really conservative to me. Even at 30% risk index, there's still a substantial fixed-performance assets such as corporate bonds, commodities and real estate. On top of that, the forecast for 3 years investing in the growth portfolio is negative, which probably means the modal thinks that equities are overvalued. Nevertheless, the idea of low fee investing charms me like candy to a child, I invested in their growth portfolio.

This is changed in the recent optimization. Now, a risk index of 30% is nearly fully invested in US equity. The target allocation for US equity is 68% but one of the core ETF in international equities is IVV, which actually a holding of 500 of the largest cap U.S. stocks. So the actual exposure to US equity can be as high as 80%.  Not that it's not a good option, but if one wants to fully expose their portfolio in US equity, I would look to invest directly into QQQ or SPY.

To get a somewhat similar portfolio of the past, it would fall between 14-20% risk index. 

Small cap (blended) 
There used to be a small cap asset class but I think it's now re-categorized into US Equities.

The Health Care Select Sector Fund
One of the winners across the board is the XLV US. I can't tell why but I know it's the new fund that appears in most of the portfolio. If you take a look at Bursa, KPJ and PHARMA hasn't been performing that well. Opportunity in local market for healthcare?

Asia ex Japan 
One of the lag-gers has been Asia ex Japan ETF and it seems like it got kicked out from the new game.

Vanguard REIT
I have always like the Vanguard REIT ETF, and they have perform relatively well this year.  However, the option are missing from all the new portfolio. My very old understanding is that REITs are defensive stock when market is bad. And we can see the elite REITs in KLSE is performing well compare to others.  Unfortunately, the algorithm does not recognize this.

The changes are more drastic than I thought an algorithm would do without real crash in any global markets, yet. From the front-end view, it certainly looks like the risk index is more reflective now (36% index means there is a 1% chance of losing 36% value). While I like what they do (seminars, talks, explaining how the algorithm works), there's really little flexibility in choosing your portfolio (for example, holding a 36% risk index fund + 10% in Vanguard REIT and Gold). Nevertheless, it's still the easiest, smart and low-fee investment in Malaysia.

Is fully letting go to robot investing the best way forward? Only time will tell.