Investing can be overwhelming, especially for novices in the industry who tend to make investment strategies based on gut feelings. In order to get a solid grasp of investing, investors are often pushed to seek advice from an investment advisor.
However, not many investors can afford to pay the hefty fees of getting an investment advisor. In view of that, the emergence of a robo-advisor in the investing world would seem to make it simpler for people to invest at a lower cost.
Robo-advisory has landed in Malaysia
In 2017, Securities Commission Malaysia (SC) introduced the Digital Investment Management framework that sets out licensing and conduct requirements for the offering of automated discretionary portfolio management services to investors.
The introduction of the regulatory framework soon led to the advent of robo-advisory services in the Malaysian market that gave the impetus for Silverlake Group, one of the largest digital innovation companies in the financial and capital market industry in Asia, to explore the business model.
The digital innovation company teamed up with Japanese fintech player Money Design Co Ltd, to build GAX MD Sdn Bhd, a joint-venture company that aims to offer digital investment management services to Malaysians.
In June 2019, the company launched a digital wealth management service, or a robo-advisory service named MYTHEO, with a starting commitment fee of RM100.
The story behind MYTHEO
Before MYTHEO was even launched in Malaysia, Money Design launched this robo-advisory service in Japan under the brand name THEO in 2016. It was the first digital investment management service regulated by the Japan’s Financial Services Agency.
Subsequently, the firm wanted to expand its business globally. THEO currently manages more than USD450 million in assets with a customer base of over 75,000 Japanese investors.
Silverlake Group wanted to collaborate with a firm that already had a proven track record in the robo-advisory service industry. The two firms then joined hands to form GAX MD that was designed to tailor THEO’s investment service for Malaysians, thus the name ‘MYTHEO’.
According to Ronnie Tan, Chief Executive Officer of GAX MD, the company strives to promote financial literacy and increase financial inclusiveness in Malaysia. He believes that millennials that make up 29% of the Malaysian population is a large untapped segment when it comes to investment products.
Ronnie says, “We want to educate these 8 million millennials on why investment is so important, and to encourage and inculcate saving and investment habits among Malaysians. Most importantly, we want to make the service affordable and convenient, thus enabling and empowering the underserved segment, no matter the older or younger generation, to start their investment journey.”
GAX MD is driven to enable users to invest in those moments that are often set aside for that “one day”, MYTHEO gives investors the flexibility to deposit and withdraw funds at anytime, through an integrated online banking payment system and an automated online trading system to the US stock exchanges.
It provides a seamless onboarding experience as users are only required to answer five simple questions and a personalised portfolio will be generated.
The robo-advisor then analyses the user’s requirements by using a proprietary algorithm developed by Money Design with Kyoto University, Japan, and generates an optimal portfolio that is based on the user’s profile, total asset value and risk tolerance. The entire onboarding process is targeted to be completed within 4 minutes.
“The way we structure a portfolio is really driven by the customer’s personalised information rather than being goal based. The key thing is that it should be based on fundamental functional portfolios which consists of growth, inflation hedge and income. This structure also allows customers the option and flexibility to vary their portfolio composition according to their needs,” said Ronnie Tan, CEO of GAX MD Sdn Bhd.
MYTHEO, through a proprietary AI-assist engine, analyses market sentiments from global news, economic and market data to better manage risk returns of the portfolio; while users’ investment portfolio will be automatically rebalanced and optimised. In addition, the MYTHEO platform is hosted in a highly secured infrastructure setup.
“Customer funds are all kept under a trustee in Malaysia, ensuring that the money is in safe custody. MYTHEO is licensed by the Securities Commission. There are strict compliance and regulations in place to ensure the safekeeping of customers investment and to ensure security, system and operational controls are in place,” Ronnie added.
According to Ronnie, today MYTHEO has close to about 59 Exchange-traded Funds (ETF) that makes it stand out from the local competitors. With a larger pool of ETFs, the users will be able to attain diversification of portfolios, better analysis of performance data, more robust portfolio management and lower concentration of risks.
MYTHEO also encourages consistent savings. This can be achieved through their Regular Savings Plan feature that allows customers to automatically invest a regular amount each month. Another feature by MYTHEO is the option for its customers to have multiple portfolios with different risk tolerances and investment horizons.
Though the firm’s primary focus now is to build a solid foundation in the Malaysian market, Ronnie says the company is eyeing to expand in the Asia regions for future plans.