Wahed 2020 Review: The First Halal-Investing Robo-Advisor in Malaysia with Huge Potential!

Late last year, I was introduced to Wahed, a robo-investing platform that prides itself on being the first halal investment robo-advisor in Malaysia.

Less than 4-months of launch in Malaysia (Wahed was started in New York), Wahed has been making an impression among fellow fintech and investment enthusiasts.

Being an enthusiast myself, I have also signed up for a Wahed portfolio to personally try it out myself, and got an RM10 FREE bonus while doing so  (remember to apply my promo code “YIXCHI1” to get the bonus!). 

In this article, let’s dive deep into Wahed, and see if this is a robo-advisor that you should invest in!


(1) First thing first: What is Wahed?

Wahed is a robo-advisor that helps invest your money into Shariah-compliant investments*.

What differentiates Wahed from other robo-advisors is that they are the first company that has received an Islamic Robo Advisory license from the Malaysian Securities Commission.

As such, Wahed also takes up an important role in fulfilling the Malaysian Muslim community that is looking for an investment platform that is aligned with their values of life.

*For readers who are unclear, Shariah-compliant investments are investments governed by the requirements of Shariah law and the principles of the Muslim religion.

Wahed Invest is one of the new robo-advisor platform in Malaysia.

(2) Who Certifies Wahed’s Shariah compliance?

Wahed’s Shariah review is done by their Shariah Advisor, Dr. Aznan Hasan.

Dr. Aznan is the President of the Association of Shariah Advisors in Islamic Finance & Deputy Chairman of Shariah Advisory Council of the Securities Commission (SC). He is also a former member of the Shariah Advisory Council of Bank Negara Malaysia (BNM).

Wahed also has Straightway Ethical Advisory LLC (a US-based Shariah financial advisory firm) to advise them on matters of Shariah compliance and Islamic financial ethics at the group level.

Source: Wahed’s Official Site


(3) How Wahed Invests Your Money?

Now, though positioning themselves as the forerunner of halal investing, Wahed is at its core a robo-advisor that invest on behalf of their users too, just like its competitor StashAway and Mytheo.

Hence, Wahed is definitely a robo-advisor that you should not overlook if you are looking to build your passive investing portfolio, regardless of your religion and background.

(a) Fund Management Methodology

Just like its robo-advisor competitors, Wahed’s fund management strategy is powered by its proprietary financial algorithms. This means that there is no way we can back-test the strategy ourselves aside from the information shown at Wahed’s official site.

Unlike StashAway’s ERAA methodology, there is very little mention of how exactly Wahed manages the users’ funds.

That said, Wahed does mention that its financial algorithms are derived from the Modern Portfolio Theory (MPT). Essentially, the idea behind MPT is to help an individual create optimal portfolios that are tailored to the needs of the user based on one’s risk tolerance.

Personally, it is a little bummer to see so few details about the investing methodology employed by Wahed on their website (Wahed, take note).

More explanation about the investing methodology behind the scene would be very helpful.

(b) Investment Instruments: 5 Major Asset Classes

The good thing, though, is Wahed does give us an idea of what they are using their users’ funds to invest in.

As per my experience**, there are 5 asset classes that Wahed will invest our funds in, namely:

    1. US Stocks (Wahed FTSE USA Shariah ETF)
    2. Malaysian Stocks (MyETF MSCI Malaysia Islamic Dividend)
    3. Sukuk (Islamic Bond) (RHB Islamic Bond Fund)
    4. Gold (TradePlus Shariah Gold Tracker)
    5. Cash

There are 6 different risk profile that you can choose from. Depending on your risk profile, there will be a difference in the allocation of your funds across these assets.

**Information on assets and asset allocation is accurate is per my record when I signed up for a Wahed account. Unfortunately, unlike StashAway, Wahed does not reveal the total number of asset classes that they can invest in.


(4) Fees Comparison: Competitive, But Can Be Better

One big advantage that robo-investing services have over conventional mutual funds is its fees.

Generally, while typical mutual funds have an average fee of 3-5% per year, robo-investing services charge only a fraction of the fee (<1%).

This is important, as a few percentage differences in fee could mean a lot to your return. Here is a simple calculation to give you an idea:

 RM100,000 at 5% fee per year = RM5,000 on fees.

RM100,000 at 1% fee per year = RM1,000 on fees (and no, robo-investing services offer lower fee than 1% at RM100,000).

The question now is, how are Wahed’s annual fees compared to the other presently available robo-investing platforms – StashAway and MyTheo?

Now, every robo-investing platform has its own tiers of pricing. Hence, to make my life (and yours) easier, I am comparing the fee in terms of the category of fund amount:

Full fee details: StashAway, Wahed, MyTheo.

Now, as you can see, Wahed’s annual fees are competitive, and it gets even cheaper when your fund exceeds RM500,000 and above.

That said, in terms of versatility of fees, I think StashAway is still the robo-advisor to beat.


DON’T MISS THIS: Click HERE to Get an EXCLUSIVE $5 (RM20) BONUS When You Fund Your Wahed Portfolio today (REMEMBER to apply my promo code “YIXCHI1”)!


(5) Customer Service: Up Your Game, Wahed!

At this point in the article, I would like to say that while lower fees are important, it is not everything. A lower fee that compromises the overall customer experience is a NO-NO.

After all, what’s the point if a company has a low fee but no one is attending to customers’ issues properly?

To test out Wahed’s customer experience, I sent out inquiries to all 3 channels of customer support (as stated available in the Support section of the app): Email, Phone & WhatsApp, all during office hours.

Firstly, Wahed’s response time for email is decent. However, I failed to reach out to the support team via call and it is also disappointing to see that there is no WhatsApp chat support available yet.

As a whole, I think Wahed has to really up their game to stay competitive in customer experience when competitor like StashAway is already providing more support channels for users to reach out to them.


(6) How to Open an Account?

Opening a Wahed account is simple and can be done in less than 10 minutes (Click HERE to install the Wahed app on your phone). And while doing so, remember to apply my promo code “YIXCHI1” to get an RM10 FREE Bonus when you fund your Wahed portfolio!

The account opening process is also straightforward. You will be asked about your investing goals and your savings in order to identify your risk profile.

Then, you will be recommended with one of the 6 portfolios from very conservative to very aggressive. Of course, you can also choose your own portfolio if you have a personal preference.

Once you completed all the procedures, it will take a few days to get your account verified and you are good to start!

You will be recommended a portfolio upon completion of your profile.

(7) What do I like About Wahed?

(a) Huge Market Potential

What Wahed is providing is truly one of its kind at the moment, and fits in well with the demographics of the majority Muslim community in Malaysia.

In short, Wahed is the to-go robo-advisor platform for people that are looking for Shariah-compliant investments.

(b) Help in Promoting Ethical Halal Investing in Malaysia

Given its unique positioning, Wahed is a great platform to promote halal investing to fellow Malaysian users regardless of religion and background – of which I like its core principles and concepts.


(8) What Could be Better?

(a) Customer Service needs Some Work

As discussed above, Wahed needs to put more effort to improve its customer service. That said, I do understand that Wahed has just launched in Malaysia (Oct 2019) and may need time to build up their Malaysian team.

On this matter, I will revisit Wahed’s customer service in my review next year and see if there’re any improvements.

(b) App UI needs Refurnishing

One thing that annoys me while using Wahed’s app is that the app interface seems to have issues showing the last letter and decimals of the word and numbers (eg. Overvie’X’ and RM100.’XX’). This may be something that Wahed will have to resolve with their backend team.

Wahed must improve its UI.

(c) Minimum Deposit of RM100

Unlike competitors like StashAway that has no minimum deposit, Wahed has a minimum deposit of RM100.

While this may not be a big issue, but it is definitely not as flexible as other robo-advisors around and I would love to see this minimum being lifted in the future.

(d) Only 1 Portfolio for each User (for Now)

As of the time of writing, there is no way for me to create another portfolio in Wahed other than the one I’ve created when I opened my account.

Meaning, I am not able to open a Moderate risk portfolio if I started off with an Aggressive risk Portfolio.

This is kind of a bummer because, in comparison, StashAway allows multiple portfolios of different risk profiles.


No Money Lah’s Verdict – A Robo-Advisor with Huge Potential

Is Wahed a good robo-investing platform?

Personally, I feel that Wahed has done a good job of positioning itself at the forefront of halal investing in the robo-advisor space.

Not only that, I’ve also heard good feedback from the Malaysian community, especially their awesome referral reward: Fund a minimum of RM100 and get RM10 FREE Bonus – Instant 20% Gain!.

If Wahed is able to enhance its customer service and user experience, I foresee that it will definitely give competitors like StashAway and Mytheo a good run of their money.

If you find this review on Wahed useful, my suggestion is to TAKE ACTION on your investments RIGHT NOW: Time wasted on inactions is more painful than money badly managed.

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p.s. Which Robo-Advisor Should I Invest In?

Now, if you are wondering if you should go for one robo-advisor over another, why not try investing in these platforms and see which one fits you the best?

StashAway: Claim your EXCLUSIVE 50% off your fees for 6 months when you use my link HERE!

Mytheo: Enjoy FREE 3 months management fee when you use my link HERE!


Disclaimers:

  1. Past return is not indicative of future performance. (just like your mom may not be angry at you today doesn’t mean she will not get angry with you tomorrow) 
  2. Now, one thing that I have yet to comment is Wahed’s return. As Wahed is still new in Malaysia (since Oct. 2019), I cannot comment on the return – and neither you should take others’ words as it is. I will keep monitoring the return and give my feedback in my 2021 review. 
  3. This post may contain affiliate links that afford No Money Lah a small amount of commission should you sign up through the links.

 


How to Invest Using a Robo Advisor in Malaysia

[UPDATE 28/8/2019: Since my writing, StashAway has managed to raise USD12 million in Series B funding, and managed to deliver a 4% – 11% annual return since 2017]

Let’s get right into the topic:

We can now employ the service of a robo-advisor to invest on behalf for us in Malaysia, legally.

With the advancement of algorithms and data technology, there has been a rise of ‘robo-advisors’ designed to invest for the mass market consumers since the past few years around the region. In short, we can now depend on algorithm systems to help invest our money.

In this article, we are going to look into the particulars of a robo-advisor, and I’ll also share my thoughts on StashAway, Malaysia’s first robo-advisor platform.

But first thing first…

What is a robo-advisor & how does it work?

In its simplest form, robo-advisor is built on a system of algorithms and data to invest on behalf of customers.

Imagine Jarvis, the AI for Ironman, but specifically tailored to manage money and investment for retail investors like us (albeit not as advanced as Jarvis la).

In reality, how a robo-advisor work is simple. Simply put, robo-advisors will help you invest your money into different assets (normally via Exchange Traded Funds, ETFs*) based on your investment goals and risk preferences

If this sounds too simple for you, it really is that simple.

The core idea of robo-advisors is to make investment simple and accessible to everyone. Normally, all you have to do is to identify your investment goals and how much risk you can take to get started. Then, just sit back, relax, and let the algorithms do the work for you!

*ETF is a marketable security that you can invest in where it tracks the performance of a group of securities such as stocks, commodities, and bond. (eg. FBMKLCI-EA is the ETF that tracks the performance of our very own Kuala Lumpur Composite Index, KLCI).


Enter StashAway, Malaysia’s first robo-advisor platform

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First launched in July 2017 in Singapore, StashAway is the first robo-advisor platform that follows through with the momentum and entered the Malaysian market late last year.

As the first robo-advisor in Malaysia, I am very intrigued to find out what it is all about. So, without further ado, let’s dive straight into it!


How does StashAway invest your money?

This is the first question that came to my mind when I was told about robo-advisor. So it goes without saying that I have to get this answered right off the bat.

The framework that powers all the all the investment decisions behind StashAway is called the Economic Regime-based Asset Allocation (ERAA).

Essentially, ERAA is a set of algorithms that make all the investment decisions for you by considering 2 important factors, among all:

Ensuring constant customers’ risk exposure throughout different economic conditions, and

Optimizing customers’ returns under different economic conditions.

Under ERAA, your money will be invested into various Exchange Traded Funds (ETFs) in accordance with your risk appetite and investing goals. Not only that, the algorithms will also allocate the investments according to the economic condition at any moment.

ERAA separates the economy into 4 different regimes, namely the Good Times, Inflationary Growth, Recession and Stagflation (Source: StashAway)

If that’s not enough, ERAA will also track macroeconomics news and move your investments towards more defensive asset should the algorithm detects potential market crashes.

In short, StashAway’s ERAA framework is designed to ensure long term wealth creation within customers’ risk preference.


My StashAway Experience

To further my understanding about StashAway, I went on to try out the app itself. In general, I like the interface and the overall application process.

In essence, you get to select your investment goals and risk appetite. Then, StashAway will recommend an asset allocation for you. (eg. If you opt for a more conservative risk exposure, your investments will be focused towards Treasury Bond ETFs, which are relatively less volatile in nature)

Note that while you have the flexibility to readjust your risk appetite during the process, you cannot control the proportion of asset allocation that is suggested by StashAway. (eg. If StashAway suggests 15% weightage on Treasury Bond ETF, you cannot change the weightage to 10%)

Once you are done with the initial settings, you can transfer money to the fund and choose to set up a monthly transfer if you want to invest your savings monthly into the fund.

One of the good thing with StashAway is that there is no lock-up period. This means that you can choose to withdraw your investments at any time.

As a whole, I had a decent experience while checking out the app.

“I CAN NOW DO MORE THAN WHAT CHU THINKKKK” [Buzz Buzz]

My Rant with StashAway and the Risk Involved.

(1) ERAA Framework not independently verifiable

This is my biggest and only rant with StashAway.

As mentioned above, the ERAA framework is able to recognize different economic conditions and allocate customers’ investments accordingly (they call it ‘Reoptimization’). By doing so, StashAway claims to be able to reduce the impact of a financial crisis.

All these explanations are backed by a whitepaper with backtesting charts that showed how the ERAA framework is able to perform better in relative to the S&P 500 Index and 60-40 Stock-Bond allocation strategy during the 2008 financial crisis.

However, the fact that StashAway’s ERAA framework and software is not released to the public means there is no way I can verify how true their claim is.

In short, this means that without any available tools to backtest StashAway’s claims, we will not only be investing our money with StashAway, but also our faith on the effectiveness of the framework to deliver its promises during the next crisis.

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(2) Risk: Past performance does not reflect the future

Even if StashAway’s performance did outperform the S&P 500 index during the 2008 financial crisis in backtesting, this does not mean it will perform the same for the upcoming crises.

Reason being, every crisis is unique on its own and is triggered by different factors. Hence, what worked for StashAway’s framework in the past may not necessarily work in the future crises.

While I feel this is not something that StashAway can fully control, I think it is necessary for readers to understand that in any investment, past performance does not guarantee future performance.


What I Like About StashAway

But wait, let me clarify: I do not hate StashAway. In fact, in many aspects, I kinda like it a lot:

(1) StashAway is regulated by the Securities Commission (SC)

While checking out StashAway, what really gives me a peace of mind is to know that they are regulated by the SC.

This means that they have to go through the grueling procedures and paperwork to prove to the authority that they have the necessary consumer’s protection framework in place to ensure customers’ interest is covered in the case of events such as bankruptcy.

It is also worth noting that StashAway is just a party that manage your fund. This means that the actual assets (the ETFs) do not belong to them and are owned by StashAway’s broker, Saxo, where you are recognized as the rightful owner of the ETFs.

In short, StashAway is a legit business that helps you make investment decisions with your money and all your asset investments belong to you.

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(2) Easy to use and low barrier of entry at just RM1

Another reason to like StashAway is that of how pleasant it is to use the app. Not only you have a feeling that you are in control of customizing your investments (of course to a certain extent only), but the overall experience just trumps in terms of user-friendliness.

Moreover, StashAway’s low barrier of entry at just RM1 means that anyone can afford to get their robo-advisor experience at a ridiculously low price. This is in stark contrast of conventional unit trusts that have the minimum initial investment of RM1,000.

Simply put, at just RM1, you get to kickstart your robo-investing journey with an intuitive user experience.

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(3) Relatively low fees compared to Unit Trusts

When it comes to competition, robo-advisors such as StashAway compete head-to-head with conventional financial advisors and unit trusts.

In this case, what makes StashAway so appealing is its low fees relative to the fees charged by its direct competitors.

As an example, unit trusts will usually charge a sales fees of 5% (or more) and an average 1% annual fee for professional fund management. In comparison, StashAway charges no sales fees and an annual fee between 0.2% – 0.8%.

In the long term, a small savings in terms of fees make up to a lot of differences in terms of your return.

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(4) Good Customer support

While you may expect robo-advisor like StashAway to cut corners on human interaction, but I’ve found their customer support to be quite decent.

One of my encounters with StashAway’s customer support is how quick they are to follow-up with you. Since I’ve just moved to a new place, I have yet to change my house address on my IC. Upon noticing the difference in the address in my application and IC, they have been very quick and helpful in assisting me on the issue via Whatsapp.

Hence, a plus point for StashAway!


No Money Lah’s Verdict

As a whole, I think the rise of robo-advisor such as StashAway does provide another good investment option for the public to build wealth on their hard-earned money.

The question now is this: Is robo-advisor for you?

If you have no prior experience with investing and are considering whether to invest passively via unit trust or robo-advisor, definitely check out robo-advisor due to its low barrier of entry and relatively low cost involved.

On the other hand, if you are a DIY investor that are more comfortable with managing your own investments (provided that you know what you are doing), a robo-advisor may not be for you as its annual fees is still a considerable cost for you as a DIY investor (you don’t pay yourself management fees when you do your own homework, right?).

Ultimately, it really boils down to your own preference and lifestyle.

For me, I think having control on my own investment is essential to achieving my financial goals. However, I have no problem recommending robo-advisor to those who are looking for alternative investment vehicles other than unit trusts.

If you are interested to check out StashAway, be sure to click below to get an exclusive 50% off the management fees for the first RM100,000 invested for 6 months.

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Meanwhile, if you are keen to learn more about robo-advisor businesses around, do check out some other robo-advisors in Malaysia: Wahed (Promo Code for a FREE $10 Bonus: YIXCHI1) and MyTheo (Click HERE to claim Your FREE 3-months Referral Fee).

Note: This post may contain affilliate links that afford No Money Lah a small amount of commission should you sign up through the links.