A Storm is Coming
There was a nice article about THEO in the Japan Times on Monday.
I took three things away from it:
- They seem to have a lot fewer customers/less money than I had assumed
- The big challenge for robo-advisors in Japan is teaching people what they do
- There are a lot more robos coming (and along with that the fees should come down)
I’m still enjoying THEO. You can follow my experiences in the robo-advisor thread in the ‘investing in Japan’ forum.
Anyone else open a THEO account? How are you finding it?
Hopefully with increased competition, the fees will start coming down. At the moment THEO, Wealth Navi and 8 Now! are charging 1%, 1% and 0.88% respectively.
Considering that the only value added proposition for robo advisers is tax loss harvesting, which adds an expected 0.77% in returns annually, the fees being charged are still obscenely high.
On another note, other than an over-allergic reaction to risk in the typical Japanese psyche, fixed income products are proving to be endearingly popular. Especially mutual funds that charge 2+% annually and provide a monthly dividend payout.
Hi Desmond
I agree about the fees! The expert quoted in the article said that as there is no real difference between the algorithms they will have to compete on price.
I am not sure that tax loss harvesting is the only value proposition though. There is also the ability to make small monthly payments (which would not be possible if you were paying a fee like you do on Rakuten).
Also robos are a godsend for inexperienced investors, who need a simple one-stop solution.
Expensive mutual funds with monthly payouts don’t sound all that great 😛
Do you know anything else about Wealth Navi or 8 Now?
Hi Ben
Indeed the ability to make regular monthly contributions without fees is critical if the core of one’s portfolio is centered around low cost mutual funds. Currently, there ain’t any way around that unless the investor conscientiously decides to invest in ETFs via a NISA account. Or brokerages expand their scope of NISA no-commission products to include mutual funds.
Also strongly agreed that for the general populace who rather not DIY their investment portfolio, robos are the best thing since sliced bread.
Disclaimer: I adhere to the Boglehead philosophy so I go to extreme lengths to squeeze out extra returns even if it is just 0.01% annually.
With regards to 8 Now, perhaps due to its association with Morning Star, its scope and portfolio allocation is very similar to Betterment/Wealthfront.
Wealth Navi is invitation only so cannot comment on that. Maybe someone in the community has more information.
Great to have a Boglehead in the house 😀
Would love to publish a guest post about your investment experience/journey if you are interested in sharing.
Otherwise please keep chiming in -your comments are much appreciated.
I just started opening an account with 8 Now. Thanks for the tip!