SinoPac Securities Co (永豐金證券) and Alpha Fintech Co (阿爾發金融科技) yesterday began a sandbox experiment that allows investors to buy foreign exchange-traded funds (ETFs) at a fixed amount every month, while having automated advisers offer portfolio recommendations.
It is the first time that investors can purchase overseas ETFs with the dollar-cost averaging approach, as the Financial Supervisory Commission previously only allowed the purchase of a fixed number of foreign shares at regular intervals.
“That is a breakthrough for local investors, as the strategy of dollar-cost averaging could help reduce investment risks and avoid bad decisions driven by human emotions,” Alpha chairman James Chen (陳志彥) told a news conference in Taipei.
Photo courtesy of SinoPac Securities Co
Chen said that many investors withdrew their money when the stock markets tumbled in March last year, but if they had adopted dollar-cost averaging, they would have continued investing and raked in steep returns when the markets recovered.
Alpha Fintech would suggest that investors open a portfolio of four to six ETFs operated by Vanguard Group Inc according to their risk appetite, which can be assessed by their profit goals and endurance for investment loss, Chen said.
Investors would be categorized into 13 groups — from the most conservative to the most aggressive — and each group would receive different recommendations, he added.
“There are too many available investment targets in the market and the biggest question for investors is which to buy. Our robot adviser services can be a solution,” Chen said, adding that its algorithm can help calculate the odds of investors reaching their profit goals.
People can invest from US$100 to US$700 per month, the firm said, adding that the experiment is limited to Taiwanese.
The total investment volume of the experiment cannot exceed NT$200 million (US$7.16 million), with each participant allowed to invest up to NT$250,000, it said.
Separately yesterday, the commission announced that all securities firms can offer programs with dollar-cost averaging for foreign shares or ETFs.
SinoPac and Alpha, which gained the commission’s approval to launch the experiment in early March, are still ahead of their rivals, as their platforms are ready to go, the commission told a news conference in New Taipei City.
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