Fintech: New robo-advisory offering in town

This article first appeared in Wealth, The Edge Malaysia Weekly, on June 27, 2022 - July 03, 2022.
Fintech: New robo-advisory offering in town
-A +A

Retail investors are spoilt for choice these days. Versa, a local start-up that allows individuals to invest in a money market fund, launched its robo-advisory solution this month to help the man-in-the-street generate better investment returns. 

Individuals can invest in its two new investment portfolios for as low as RM100 and an annual management fee of 1%. No sales charges are imposed, says Versa CEO Teoh Wei-Xiang. 

“Most unit trust funds in the market have a sales charge or exit fee, which eats into the investors’ returns. We operate on a model that doesn’t charge investors any upfront fees,” says Teoh. 

He says Versa app users can start putting money in its two newly launched investment portfolios. Those with a higher risk appetite can invest in its growth portfolio, while the lower-risk ones can invest in its moderate portfolio. Those portfolios are managed by Affin Hwang Asset Management (AHAM), a partner of Versa. 

“We will be launching our conservative portfolio soon,” he adds. 

What is unique about Versa’s investment portfolios compared to other existing robo-advisory firms? Teoh says each of its portfolios consists of a variety of actively and passively managed funds, unlike some of its peers that invest only in passively managed exchange-traded funds (ETFs). 

“We try to get the best of both worlds. AHAM selects actively managed funds that are well positioned to outperform the market. It also picks cost-effective ETFs that suit the market environment,” he says. 

Based on back-tested results, Teoh says Versa’s moderate and growth portfolios have generated annual returns of 9.1% and 15.7% in the past three years. 

A glance at the Versa app shows that its two portfolios invest in various funds managed by AHAM, HSBC, BlackRock, Vanguard and PIMCO. 

“Our app users can invest in the two portfolios by performing a money transfer via FPX or using their money invested in AHAM’s money market fund.”

Teoh says Versa has attracted about 45,000 customers putting in roughly RM170 million into AHAM’s money market fund offered through the app. 

“The money that flew in has grown and stabilised. We feel that it is time now to add on to our product range,” he says. 

The start-up has more plans in the pipeline, says Teoh, as it is in the midst of its fundraising activity. “We recently received an eight-figure commitment of capital injection,” he adds, disclosing few details. 

These plans could include launching thematic portfolios that cater to the younger generation, who like to invest in ideas. “They are very idea-centric. That’s why thematic investments are attractive to them. We are looking at that, but not soon. We want to grow our existing portfolios first.” 

The start-up’s plan to partner with a multinational financial service corporation to allow its users to spend their money in AHAM’s money market fund for various purchases has been put on hold. “The plan is still ongoing. But we prioritised other things on our roadmap for now,” he says.

“We will continue to focus heavily on user experience. We found that the buying and selling process of investment products is tedious and not seamless, with many young people put off by it. It is our mission to make it simple, fun and rewarding.”