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StashAway’s Economic Regime-based Asset Allocation (“ERAA”) framework builds and manages portfolios by targeting different level of risk and attempting to maximize net investment returns at each risk-point.
The framework is dynamic and strategic in nature, and it is built on 4 pillars: (i) Regime-based asset allocation, (ii) Risk Control, (iii) Valuation Gaps, and (iv) Managing Asset-specific Risk
The First Pillar (Regime-based Asset Allocation) is at the core of ERAA’s portfolio construction logic, and uses economic data to adjust the target strategic asset allocation at each risk level. The main assumption behind this pillar is that the economy ultimately drives medium term markets’ returns. 
 
The Second Pillar (Risk Control) is the risk management layer of the framework, tasked with identifying cases in which economic data either are unclear or are not driving market behaviour. If the momentum (rate of change) of growth and/or inflation isn’t solid enough to provide predictive guidance, ERAA® adjusts our clients’ portfolios to an All-Weather strategy until the direction of economic data is clear again. The All-Weather strategy is designed to simultaneously protect capital and perform well in uncertain economic conditions.
 
The Third Pillar (Valuation Gaps) takes into account each asset class’ valuation to underweight overvalued assets and discover opportunities to overweight undervalued assets. Valuation Adjustments are based on economic regressions, and therefore are anchored around ERAA’s main assumption that the economy ultimately drives medium term markets’ returns.
 
The Fourth Pillar (Managing Asset-specific Risk) sets asset allocation limits based on the historical relative performance of each asset compared to the portfolio's same-risk benchmarks. Taking into account an asset's historical performance, ERAA® adjusts its maximum allocation. This ensures that any idiosyncratic drawdowns in a specific asset don't have an outsized impact on portfolio performance.
 
Read our <a href="https://www.stashaway.hk/r/stashaways-asset-allocation-framework" target="_self" rel="undefined">white paper</a> on StashAway’s investment framework to know more about ERAA®.

What are the assumptions of ERAA®, StashAway’s investment framework?

An ETF, or an Exchange-traded Fund, is an index-tracking investment vehicle listed on a major exchange. Indices are composed of asset classes, such as stocks or bonds, in a particular segment of the market, such as technology, energy, or real estate. ETFs are funds that are traded like stocks but have the diversified portfolio structures of a mutual fund. ETFs provide passive exposure to any asset class by mirroring the returns of an index. For example, the SPDR SPY S&amp;P 500 is an ETF that tracks the performance of the S&amp;P 500.
ETFs offer diversification, higher liquidity than individual securities, and lower fees
An ETF typically charges low fees of around 0.15% to 0.25%. In comparison, mutual funds, which are already an expensive alternative to ETFs, have fees that range from 1.25 to 2.0%. 
Learn more: <a href="https://www.stashaway.hk/r/what-is-an-etf">What is an ETF?</a>

What is an ETF? Do ETFs have fees?

StashAway chooses the best-in-class ETFs on your behalf. We choose the largest, most liquid, most tradable, and most cost-effective ETFs with the lowest tracking error to the index and a sufficiently long track record. 
We choose simple ETFs, which means they have no leverage or complex payoffs and have no ETNs to avoid credit risk of issuers.
You can find our fund selection criteria <a href="https://www.stashaway.hk/r/how-stashaway-selects-etfs">here</a>.

How did StashAway choose the ETFs that are in my portfolio?

With Flexible Portfolios, you get the freedom to customize portfolios the way you want. You can choose which asset classes to include and adjust their allocations according to your preferences.
 
However, it is not possible for our General and Goal-based Investing Portfolios, Thematics Portfolios and ESG Portfolios, as our algorithm carefully picks the ETFs most suitable for your goal based on your risk preferences, selected goal, and current economic regime.

Can I choose which ETFs or securities I invest in?

When investing as an individual, there are minimum trade sizes and high transaction costs imposed on the account. This makes investing as an individual cost-prohibitive. 
With StashAway, you will benefit from the constant monitoring, rebalancing, and re-optimisation that we provide. Moreover, StashAway is able to offer fractional shares to make your portfolio more precisely allocated that is nearly impossible if you were to do it on your own. 
Learn more: <a href="https://www.stashaway.hk/r/who-should-manage-your-investments">Who Should Manage Your Investments?</a>

Why shouldn’t I just invest in the ETFs you have chosen on my own?

StashAway always ensures that the best interests of our customers are considered in the generation and execution of orders.
For example, in the execution of customers’ orders, StashAway will consider multiple factors with the aim of achieving the best possible execution of all customers’ orders, including but not limited to:
<ul>
<li style="font-weight: 400;" aria-level="1">Unit Price</li>
<li style="font-weight: 400;" aria-level="1">Execution-related costs</li>
<li style="font-weight: 400;" aria-level="1">Speed of execution</li>
<li style="font-weight: 400;" aria-level="1">Probability of full order fulfilment</li>
<li style="font-weight: 400;" aria-level="1">Order size</li>
<li style="font-weight: 400;" aria-level="1">Nature of the access to the applicable brokers and execution venues</li>
<li style="font-weight: 400;" aria-level="1">Any other relevant characteristics of the investment product</li>
<li style="font-weight: 400;" aria-level="1">Potential conflicts of interest</li>
</ul>
What constitutes an Acceptable Tolerance Threshold (ATT)?
In relation to settlement involving several customers’ portfolios, a shortfall/excess discrepancy will, in respect of a portfolio, fall within the ATT where it meets both criteria below:
(a) The absolute value of the shortfall/excess discrepancy is not more than USD 0.01 (or its equivalent in HKD); and
(b) The absolute value of the shortfall/excess discrepancy, when taken as a percentage of the value of the relevant portfolio's contribution in the bulk settlement under which the shortfall/excess discrepancy arose, is not more than 0.0001%.
More details on the ATT can be found in the Account Opening agreement <a href="https://assets.ctfassets.net/hrpsj0f8hvgc/2uIX48cJNoAQYE6KxJeugY/efe8fc1102d12315d794cfa2397a23fe/en-HK-account-opening-document.pdf" target="_self" rel="undefined">here</a>. Further details also can be found in our Global Order Execution Policy <a href="https://assets.stashaway.com/documents/hk/order-execution-policy-en-v1-07062022.pdf" target="_self" rel="undefined">here</a>.

How does StashAway execute my orders and how often?

The basis of our investment strategy is to build portfolios with particular asset allocations that are optimal for 4 different phases of the economic cycle. When our investment team identifies and signals a change in the economic cycle, our technology will automatically re-optimise all portfolios' asset allocations. 
To learn more about our investment methodology, visit: <a href="https://www.stashaway.hk/r/stashaways-asset-allocation-framework" target="_self">StashAway’s ERAA® (Economic Regime-based Asset Allocation)</a>

What is re-optimisation?

Rebalancing a portfolio involves adjusting the composition of a portfolio by buying and/or selling specific assets in order to re-align a portfolio to its target composition in the case that price moves change the asset allocation of your portfolio.
 
Learn more: <a href="https://www.stashaway.hk/r/what-is-rebalancing">What is Rebalancing?</a>
 
Were you looking for re-optimisation instead? Click here for <a href="https://www.stashaway.hk/help-center/900004458306-what-is-reoptimisation" target="_self" rel="undefined">Re-optimisation</a>.

What is rebalancing?

Our system automatically reinvests any dividends you may earn. All dividend payments are reflected in your "Transactions" tab.

Where do dividends go?

To see your total assets and returns:
Step 1: Log in to your StashAway account.
Step 2: Select your portfolio.
Step 3: Go to the “Overview” tab to view your portfolio performance and the “Assets” tab to view your assets allocation.
 
To see your transaction history:
Step 1: Go to the “Transactions” tab
Step 2: Click on the drop-down arrow labelled “All-Account transactions”
Step 3: Select your portfolio and you may view all transactions (buy order, sell order, and/or dividend received) made for the respective portfolios.
 
Your Monthly Statement is found under the "Statements" tab.

Where can I see all my investment activities?

The portfolio returns on our website and app are benchmarked against the MSCI All Country World Index (MSCI ACWI) for equities and the FTSE World Government Bond Index for bonds.
 
These benchmarks apply for the following portfolios:
<ul class="wysiwyg-text-align-justify">
<li>General Investing powered by StashAway</li>
<li>General Investing powered by BlackRock®</li>
<li>Responsible Investing</li>
</ul>
Like our General Investing and Responsible Investing portfolios, the MSCI ACWI includes exposure to equities in both developed markets (such as the US, Western Europe, Australia, and Japan) and emerging markets (such as China, Brazil, and India).

What are the benchmarks StashAway uses?

Questions about our portfolios and investment framework