ETF robo adviser to launch in Hong Kong

Added 4th August 2016

Hong Kong-licensed online broker 8 Securities plans to launch a second generation ETF robo-adviser in the current quarter with lower fees to attract cost-sensitive investors.

ETF robo adviser to launch in Hong Kong

The new portfolio, comprised of various exchange traded funds (ETFs) listed in Hong Kong, will be managed by iFast.

The overall charges will be cheaper than the old version’s 0.88% of the overall portfolio size per year, said Mathias Helleu, chairman and co-founder of 8 Securities. The minimum investment is HK$1,000 ($130) with no exit penalties.

The broker introduced Hong Kong’s first robo-adviser product in January last year and subsequently in Japan four months later. Investors are matched with different risk profiles after completing an online questionnaire, similar to the approach seen in the US, he said.

The new version is considered more user friendly. Investors are first asked to set some specific investment goals, for example, for buying a house, education, retirement, with expected amount of investments within a period.

Investors will be assigned to a portfolio that buys up to 10 Hong Kong-listed traditional type ETFs. The portfolio is managed by external iFast Financial, and “will be monitored and readjusted based on changing market conditions”.

ETFs are an inexpensive and efficient way for asset diversification, Helleu noted.

Will they catch on?

8 Securities cited a forecast by Boston-based research firm Aite Group that assets held by robo-advisers in Hong Kong are expected to expand from $400m in 2016 to $20.6bn in 2020.

However, the predicted 50x growth in four years is far higher than what is expected by other analysts, who believe the acceptance of robo-advisers in Asia will be slow.

The firm's partner iFast said earlier that Hong Kong is still at the early stage in using online portfolio management. 

Helleu also admitted take-up is expected to be slow. “The big banks in Hong Kong are not particularly fast when it comes to adopting technology. The [development of robo-adviser] might be a bit longer here,” he said. 

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