Man and Machine

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    Man and Machine
    Man and Machine
    22 July 2021

    Key Highlights

    • Robo-advisories still needs to be directed by humans to ensure that it keeps portfolios on the right track amid ever-changing macro-economic and market conditions
    • UOBAM Invest integrates two key elements of human expertise and technology — the perfect example of man-machine collaboration at work
    • UOBAM Invest is equipped with glide-path feature to cater dynamically to investors' unique life situations, spending goals, or shifting risk profile

    You strap your belt in and the lights dim. The engine starts to hum and you close your eyes. A few minutes later you are flying in the air.

    We have taken flying for granted – in the pre-pandemic days at least – but we sometimes forget that we are flying thousands of feet above ground.

    The reason is simple: you are entrusting the pilot to manning a plane to get you to where you want to go. But behind the man lies a machine, a complicated and complex network of algorithms, gigabytes of data and powerful processing power. Both man and machine work together in a seamless dance – technology supports, while the pilot guides.

    It’s the same approach UOB Asset Management (UOBAM) takes with UOBAM Invest. An investing journey powered by a robo-adviser should make use of the latest technology but be guided by the experienced hands – a potent combination of science and wisdom.

    “Once you understand how UOBAM Invest’s Digital Adviser works to meet your needs and tailor the best recommendations for you, you can trust it to manage your portfolio while you focus on life’s other priorities,” says Mr Dharmo Soejanto, Senior Director, Head of Investment Partnerships & Solutions, and Chief Investment Strategist of UOBAM Invest.


    UOBAM Invest integrates two key elements of human expertise and technology through much of its platform.

    The first is in the brains of the platform, or its investment model. It instructs the platform on what to do and how to execute key investment strategies.

    Drawing on its expertise as an award-winning asset manager with over 30 years of experience, UOBAM’s human fund managers have created an investment model to cater to an investor’s needs and closely reflect the complexities of real-life investment planning.

    The model is built with several unique features that enables Digital Adviser to customise investment solutions that are best aligned with the investor’s goals, investment horizon and risk appetite.

    For instance, the platform has an algorithm that recommends portfolios according to one’s investment horizon, or how long he is expected to keep investing. The longer one invests, the higher the risk tolerance – and the higher the potential return.

    Similarly, UOBAM Invest has a feature called the “glide-path”. This is based on the idea that as you move closer towards your target date, the time left to invest is shortened. To preserve your gains, glide-path will adjust your portfolio to reduce your risk exposure.

    For instance, when you are 20 years old, and you intend to retire at 60, you have 40 years to invest. This means that you can take on higher risk levels to reap potentially greater returns. But by the time you are 50, you wouldn’t want to take on so much risk and volatility so close to your retirement date.

    The platform, through the use of glide-path, understands this and will automatically rebalance the portfolio to less-risky assets to preserve your capital instead.

    Such unique features set the Digital Adviser apart from many other robo-advisors. Rather than a static model, it is equipped to cater dynamically to your unique life situations, spending goals, or shifting risk profile. And it does this automatically without prompting.


    While robo-advisories have immense computing power, it still needs to be directed by humans to ensure that it keeps portfolios on the right track amid ever-changing macro-economic and market conditions.

    “Technology can help you run faster – that is usually a good thing, but it becomes counter-productive if you are running in the wrong direction,” notes Mr Soejanto.

    This is where the UOBAM’s Multi-Asset Investment Management Unit comes in.

    This team of seasoned investment professionals is responsible for all the key investment inputs in UOBAM Invest, such as defining suitable asset classes for investors, curating a list of Exchange-Traded Funds (ETFs) with the right target risk levels, and implementing investment constraints.

    An important role they play is in reviewing the Digital Adviser’s capital market assumptions (CMAs) every month, and updating them as appropriate, based on market conditions. These CMAs are based on UOBAM’s long-term expected return views for each asset class, taking into account expected return forecasts, volatility estimates, valuation of each asset class against its own history and asset class correlation assumptions.

    The experts analyse a slew of data, including historical returns, interest rates and credit spreads, and apply UOBAM’s institutional-grade investment process to create a blended solution for input in Digital Adviser’s optimiser.

    “It’s critical that we get the CMAs right, as this determines how the technology executes the portfolio allocation. Our role is to ensure the right investment inputs in our optimiser. With the right CMAs in place, we can then step back and let the technology take over to do its work of optimising returns and rebalancing the portfolio,” stresses Mr Soejanto.


    UOBAM Invest’s approach to melding man and machine helped investors deal with the fallout from the COVID-19 pandemic in 2020.

    The Digital Adviser, which is designed to take unusual market event shocks into consideration, revised the forecasting model for clients’ portfolios. It was able to realistically analyse downside risk and revise success probabilities for investment goals, helping investors to plan better. Meanwhile, the robo-advisor avoided the pitfalls of emotion-driven investing, pressing on with quarterly rebalancing that helped to smooth portfolio returns by taking advantage of lower asset prices during the market crash.

    Towards the end of 2020, as the investment committee adjusted CMAs, the Digital Adviser began to shift clients’ portfolio allocations away from growth stock ETFs, whose valuations were now increasingly expensive, to more attractively-valued Asia-Pacific ex-Japan equities. Seven months later, in June 2021, as the CMAs were adjusted to favour US real estate investment trusts (reits) rather than Asian stocks, the Digital Adviser shifted portfolio allocations again to optimise expected returns while controlling risks.

    This was a prime example of man-machine collaboration at work – and for the growing number of UOBAM Invest clients, this is just the first of many to come.


    For more information on the list of awards won by UOBAM, click here.

    Click here to learn more about robo-investing

    Robot-investing, your way


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