DBS Bank, together with J.P. Morgan Asset Management (JPMAM), has debuted Asia’s first global investment portfolio that not only automatically calibrates its asset allocation to an individual’s life stage and retirement timeline (also known as a “glidepath”), but also allows investors to automate their drawdowns according to their retirement income needs.
Launched as part of the bank’s holistic retirement proposition aimed at helping all Singaporeans plan and retire well, DBS Retirement digiPortfolio is premised “on the concept that investors should only take on risk appropriate to their life stage (defined as Early Career, Mid-life, and Retirement).”
It plugs a long-standing gap in the market by enabling investors “to take more risk earlier and moderate their risk when they approach retirement.”
Customers can better map out and plan “for their long-term needs while staying disciplined to invest and accumulate wealth when they are younger.”
This gives them greater peace of mind “during their golden years.”
A pilot program, progressively rolled out “to select customers since late last year, has drawn strong interest.”
DBS Retirement digiPortfolio proved “to be highly effective in motivating them to start planning for their retirement, with nearly half of the investors made up of younger customers aged 40 and below. 70% of them also opted to make recurring top-ups to their portfolios, which signaled that young investors are willing to make smaller but regular investments that will contribute meaningfully to their retirement nest egg when compounded over the years.”
Contrary to popular belief, retirement planning should “not stop at the point of one’s retirement.”
Even as investors start to make withdrawals “from their DBS Retirement digiPortfolio, it will continue to be professionally managed by the DBS and JPMAM investment teams. Investors will be able to automate these withdrawals and be presented with a view of the longevity of these payouts, as part of its market-first proposition, later this year.”
More importantly, they will be able “to see how these payouts contribute towards their broader retirement plan, which will comprise various other sources of passive income, such as CPF Life, traditional annuities, and endowment plans.”
For a customer aged 30, the portfolio would focus on leveraging the benefit of a longer investment horizon “to achieve greater capital appreciation by allocating greater exposure to equities (65%) versus fixed income (32%) and cash (3%).”
With the passing of time, the portfolio will “gradually de-risk from this skew, to hold more in fixed income instead.”
When the customer finally nears his or her pre-determined retirement age of 65 (as an example, since age is customisable), the portfolio would “have reduced equity exposure (15%) and a heavier weight towards fixed income (82%), which provides more stability and cushions the investment against market volatility.”
Prior to DBS Retirement digiPortfolio, investors looking “to invest in such a manner would incur frequent transaction or switching costs, as they transition from one portfolio mix to the next in preparation for retirement.”
DBS Retirement digiPortfolio investors pay only “a flat 0.75% annual management fee, which allows them to benefit from a fully automated experience with the glidepath strategy and enjoy other features, such as making recurring top ups and withdrawals at any time. A portfolio can be created with a minimum one-time SGD 1,000 lump sum investment, and customers can subsequently choose to top-up their portfolio monthly with as little as SGD 100. They are also not subject to a sales charge, lock-in period, or withdrawal penalties.”
The portfolio, which is professionally managed by the DBS Chief Investment Office and JPMAM, is an extension of the bank’s years-long effort “to lower barriers of entry to investing and democratise retail investors’ access to wealth management services.”
Ling Seng Chuan, Head of Financial Planning, Insurance and Investment, DBS Bank, said:
“DBS Retirement digiPortfolio is designed with careful risk calibration over decades in mind. This effectively breaks down big hurdles for customers who want to plan for retirement, yet find it too daunting. It also serves to remove some of the inertia we hear around retirement planning, by making it not only more accessible to all but also more affordable to start with.”