New robo-advisory service offers Malaysians an affordable and hassle- free investment option that leverages on digital algorithm and artificial intelligence to manage your investments
The opening of the Malaysian market to digital investment management services by the Securities Commission Malaysia (SC) two years ago provided the impetus for Silverlake Group to make the leap into robo-advisory services.
One of the largest IT solutions providers in Asia, the group became the first local digital innovation company to offer digitalised investment management services in the Malaysian market when it launched MYTHEO in June this year through its joint-venture company, GAX MD Sdn Bhd.
Developed in partnership with Japan’s Money Design Co, Ltd, MYTHEO offers Malaysians a digital investment management service via their web and mobile platforms with a starting commitment of RM500.
Robo-advisory services essentially provide financial advice or investment management online with minimal human intervention. It is driven by software which utilises algorithms to automatically allocate, manage and optimise clients’ assets.
Ronnie Tan, CEO and Managing Director of GAX MD, shares with Smart Investor how MYTHEO promotes financial inclusiveness, and helps instil the importance of saving and investing among Malaysians, especially the millennials.
Smart Investor: Can you share how Silverlake Group came to collaborate with Money Design Co to introduce MYTHEO to Malaysian investors?
Ronnie Tan: In 2017 when the SC launched the Digital Investment Management (DIM) framework which provided licensing for local robo-advisory firms, I saw an opportunity of bringing convenient and affordable investment services to Malaysians, majority of which whom had no sufficient access or knowledge about it.
The plan was to collaborate and partner with a firm that already has a proven track record instead of starting from scratch. Our management strongly believes in collective intelligence where the partner and Silverlake Group can then pool our investment expertise, domain knowledge and technological innovation together to deliver a holistic offering to the public. A pioneer in robo-advisory in Japan, Money Design Co Ltd was chosen and it is led by a group of experts in fund management from well-known companies like BlackRock Inc and Nomura Holdings. It was also a coincidence that at the time, Money Design was looking at expanding out of Japan.
GAX MD, a joint-venture between Silverlake Group and Money Design, was then formed in September 2018 and subsequently granted a Digital Investment Management license by the SC in May 2019. MYTHEO was then launched with the aim of providing this digital investment service, promoting financial inclusiveness, educating and instilling the importance of saving and investing among Malaysians.
Is MYTHEO targeted more towards investors of a specific age group eg millennials who are more technology savvy? What would be the profiles of these investors?
In this information-rich but time-starved era, MYTHEO’s services cater to a dynamic generation towards achieving financial freedom and allowing them to invest in important life moments, with minimal commitment. MYTHEO’s focus segment will be the emerging affluent market.
The emerging affluent market presently make up 10% of the population in Southeast Asia with 20% – 40% share of wealth and this group is estimated to be 21% of the population with 40% – 65% share of wealth by 2030 (Source: BCG’s Study – Beyond the ‘Crazy Rich’ – The mass affluent of Southeast Asia, 2018). This highly accessible market comprises of salaried professionals with 2/3 of them are under the age of 40 and are always in search for quality and value and rely on digital media for decision making.
In Malaysia, there are about eight million millennials aged between 25 – 35. We believe this segment is underserved and lacks the investment knowledge and experience. Notwithstanding this, MYTHEO is also suitable for Malaysians alike with different demographic profiles who may also be in similar position and require such investment needs.
What benefits does MYTHEO offer investors, especially with regards to diversifying their investment portfolios?
MYTHEO provides a multi-layer diversification to its investors. To begin with, each investor has a personalised portfolio made up of three (3) functional portfolios: income, growth and inflation hedge.
Depending on their individual profile and risk tolerance, their investment funds will automatically be allocated to an optimum proportion across these three functional portfolios. Investors will be investing in a large pool of Exchange-Traded Funds (ETFs) with a wide range of asset classes such as market equity, bonds, real estate, commodities and currencies.
MYTHEO investors will be investing in thousands of companies all around the world in developed and emerging markets. The risks of the selected ETFs are spread across more than 10,000 underlying shares. These ETFs are continuously monitored via artificial intelligence (AI) on a risk reward model. The performance of the portfolio model and allocation strategy are also tracked and monitored by our investment team, and reviewed monthly by an Investment Committee.
What factors will contribute to acceptance and take up by investors of digital investment management services like MYTHEO?
Everyone looks for convenience when starting something new. MYTHEO gives its investors just that – a seamless and convenient on-boarding process that can be done all via the App or desktop. And it is affordable with low fees and low starting investment capital. Starting a digital investment journey does not require years of experience or investment knowledge. It is made simpler with time tested and proven digital algorithms managing and auto-rebalancing your investments for you.
Digital investment management services are not like fixed deposits in a bank where you would be required to keep your funds under a fixed tenure. MYTHEO gives its investors the flexibility to deposit and withdraw funds whenever they like, conveniently too, via an integrated online banking payment system.
The back tested performance results from 2006- 2018 on our portfolio model show an encouraging positive return. For the year to date performance, from January to August 2019, the three functional portfolios achieved good returns with growth portfolio up by 11.76%, income portfolio up by 8.78% and inflation hedge portfolio up by 15.53%.
We are working on both online and offline programmes to educate and increase the awareness on financial literacy. With such proper programmes, we hope to create a greater appreciation and acceptance leading to a regular savings plan via investments on our MYTHEO platform.
What key advantages does MYTHEO have that sets it apart from other robo-advisory services in the market?
MYTHEO was adopted by a proven methodology and proprietary algorithm from Japan’s THEO. THEO has a proven track record of over US$450 mil worth of assets under management with more than 75,000 Japanese investors to date. The portfolio model has back-tested simulated performances using financial data from
2006 as well as actual performance from 2016 to see the performance of portfolios during all market cycles including a market crisis, which in turn helps protect and secure investors’ assets as much as possible.
MYTHEO invests in a larger universe of ETFs globally so investors can enjoy better returns and to diversify and minimise risks. It is not goal-based but is based on functional portfolios mentioned earlier: income, growth and inflation hedge. MYTHEO will automatically allocate and optimise your investment among these three functional portfolios.
It also allows investors to customise their own portfolio by changing their funds allocation to each of the three functional portfolios according to their preference should they want to change what was initially recommended to them by MYTHEO.
We ensure that the money you have deposited is fully invested within the same day if the depositing procedures are followed. As a safeguard, the money and assets of investors are held in a custodian bank.
Are MYTHEO users liable to tax on dividends given that much of the funds are invested in US equities and bonds?
There are no capital gains tax in Malaysia. However, there is a US withholding tax on dividends. MYTHEO investors need not worry as any dividend received for the portfolio is already on a nett basis after deduction of the US withholding tax.
MYTHEO official website www.mytheo.my