International Finance
Banking Wealth Management

DBS Bank to expand with hybrid human-robo portfolio

Next phase of expansion to be across Indonesia, Hong Kong, Taiwan, China and India

Singapore’s DBS Bank could consider a regional expansion of digiPortfolio, its hybrid human-robo investment portfolio solution that it launched in March this year. The expansion will be in key markets, the multinational bank operates in namely, Indonesia, Hong Kong, Taiwan, China and India, a DBS spokesperson told International Finance.

digiPortfolio is currently restricted to investors based in Singapore. While it was initially offered only to wealth management clients, the solution was extended to retail investors earlier this month. One can now invest in either of its two portfolios – ‘Asia portfolio’ or ‘Global portfolio’.

While the Asia portfolio comprises of SGX listed exchange traded funds (ETFs) that provides investors with exposure to Singapore, China and India, the Global portfolio consists of UK listed ETFs that provide exposure to the US, Europe, and Asia. Depending on the portfolio chosen, investors gain immediate access to a collection of four to seven ETFs that represent between 200 and 13,000 holdings in a single transaction.

So while the investment options are currently limited to two, DBS, will, as part of its next phase of expansion also introduce more varied options, the spokesperson said.

However, irrespective of the expansion that digiPortfolio could witness, the underlying USP is expected to remain the same – it will continue to make the best of technology and human beings. While the portfolio recommendations and insights will come from DBS’s investment team, robo-technology will be used to automate processes – hence the ‘hybrid human-robo investment solution’.

Explaining more on the same, Christophe Marciano, head of discretionary portfolio management at DBS Bank told International Finance that the ETFs within both portfolios was curated by the DBS investment team to provide investors exposure to specific regions and asset classes, that is in line with the investment strategy and asset allocation views set out by the DBS chief investment office. These portfolios, he added are not only constructed, but also actively managed by DBS investment teams, meaning they could be rebalanced by the teams whenever required to ensure they remain resilient to market volatility, provide optimal returns, and remain aligned to the DBS chief investment office’s views.

Robo-technology is then applied to automate processes such as back-testing, rebalancing and also for monitoring, so DBS can deliver scale and efficiency, while giving investors full transparency of trade activities. This side of the process will see the use of optimisation algorithms and technology to minimise portfolio drift, carry out performance and risk calculations as well as simulations, generate bulk orders and finally scale up portfolio management processes, to ensure DBS can deliver scale and efficiency, while giving investors full transparency of trade activities, Marciano explained.

Further, in order to cater to all kinds of investors, irrespective of their risk appetite, DBS has enabled for each portfolio to be made available in three varying risk levels, namely, ‘Slow n steady’, ‘Comfy cruisin’ and ‘Fast n furious’. So, an investor can, after choosing a portfolio on the basis of the market they want to be exposed to, and further choose the risk level that best suits their personal risk tolerance, financial situation and investment goals.

For instance, under Asia portfolio, while the ‘Slow n steady’ option has exposure to only four categories with maximum investments in Singapore government bonds, the other two options have exposure to five categories with ‘Comfy cruising’ option having a higher exposure to these bonds than the ‘Fast n furious’ option.

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