DBS and JPMorgan Asset Management (JPMAM) have launched Asia’s first global investment portfolio that not only automatically sets its asset allocation to an individual’s lifespan and retirement timeline (also known as a “glidepath”), but also enables investors to manage their drawdowns based on their retirement income needs.

DBS Retirement digiPortfolio with DBS in Asia

This was launched as part of the bank’s comprehensive retirement proposal to assist all Singaporeans in planning and retiring comfortably, is based on the idea that investors should concentrate on risk that is acceptable for their life stage (designated as Early Career, Mid-life, and Retirement).

It closes a widespread market gap by allowing investors to take greater risk sooner and reduce risk as they near retirement.

Customers can better map out and prepare for their long-term demands while remaining disciplined to invest and generate wealth while they are still young.

A test project that has been gradually introduced to a small number of clients since late last year has generated a lot of interest. Over half of the investors are younger consumers, meaning they are 40 years of age or younger.

Additionally, the DBS Retirement digiPortfolio has been fairly effective in encouraging people to begin saving for their retirement.

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70% of them choose to top off their portfolios on a regular basis, indicating that younger investors are prepared to make little but consistent deposits that, when compounded over time, will increase their retirement savings.

Even if clients begin to withdraw from their DBS Retirement digiPortfolio, it will remain managed by the DBS and JPMAM investing teams.

As part of its market-first proposition, investors will be able to automate these withdrawals and be given an indication of the durability of these payouts later this year.

More significantly, consumers will be able to understand how these distributions fit into their overall retirement plan, which will include other forms of passive revenue such as CPF Life, traditional annuities, and endowment plans.

How it operates

For a 30-year-old consumer, the portfolio would focus on taking advantage of an extended investment period to achieve better capital appreciation by allocating more exposure to equities (65%) than fixed income (32%), and cash (3%).

With duration, the portfolio will gradually de-risk from this bias, focusing more on fixed income instead. When the customer reaches his or her predetermined retirement age of 65 (for example, because age is adaptable), the portfolio will have a lower equity exposure (15%) and a higher weight in fixed income (82%), providing more stability and cushioning the investment against market fluctuations.

Furthermore, investors in DBS Retirement digiPortfolios pay a set annual management charge of 0.75%, which enables them to take use of other features including anytime withdrawals and periodic top-ups as well as a fully automated glidepath plan.

A minimum one-time lump sum investment of SGD1,000 ($744) is required to build a portfolio.

After that, consumers can opt to top up their portfolio with as low as SGD100 per month. They also don’t have to worry about withdrawal penalties, lock-in periods, or sales charges.

The portfolio is an outgrowth of the bank’s multiyear initiative to remove obstacles to investing and give regular people access to wealth management services.

Ling Seng Chuan, head of financial planning, insurance and investment, DBS Bank stated: “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. When markets become volatile as retirement nears, it can put a damper on years of otherwise diligent retirement planning. We can help mitigate this through our holistic retirement planning proposition, where DBS Retirement digiPortfolio complements other passive income such as CPF Life and insurance annuities, so that our customers can ultimately feel more secure with well-diversified and optimised retirement plans.”

Jacklyn Goh, head of Singapore Intermediaries, JPMorgan Asset Management, added: “Achieving financial independence and retiring meaningfully will be on the mind of investors as countries like Singapore, confront an ageing demographic shift. Acknowledging the personalised needs for each individual’s retirement is critical in helping investors find the right balance of having a stable and growing portfolio to help achieve their retirement goals. We are excited to partner with DBS to introduce an industry-first personalised retirement proposition for Singapore investors planning for their retirement needs. The personalised feature is what sets this retirement solution apart and brings retirees’ experience to the next level – we are proud to enable the customisation leveraging our investment insights, technology resources and model-advisory portfolio capabilities.”

Customers can easily sign up for the DBS Retirement digiPortfolio through DBS/POSB digibank.