Looking to invest while in the UAE? Check out Sarwa, the region’s first robo-advisor

Figuring out how to invest your money as an expat living in the UAE can be tricky. When choosing where to invest your money, it makes sense to shop around and understand the offerings out there.

We take a look at Sarwa – the region’s first regulated hybrid investment platform targeting young professionals.

What Is Sarwa and How Does It Work?

Sarwa is fastest growing hybrid automated investment platform for young professionals in the Middle-East. Sarwa’s platform makes investing simple and affordable, by combining proven investment strategies with technology that drives down costs. All you have to do is go to their website and answer a few quick questions to assess your risk profile, your time horizon and your investment experience. This allows them to match your investments to your financial profile and build you a globally diversified portfolio of low-cost index funds, called Exchange Traded Funds or ETFs.

Sarwa is the first hybrid robo-advisor in the region to receive the Innovation Testing License from the Dubai Financial Services Authority and graduate into a full license.

What exactly are ETFs and why does Sarwa use them?

The products Sarwa uses to invest your money are called exchange-traded funds (ETFs for short). An ETF is a security that generally tracks a broad-market stock or bond index or a basket of assets just like an index mutual fund, but trades just like a stock on a listed exchange. By design, index ETFs closely track their benchmarks—such as the S&P 500 or the Dow Jones Industrial Average—and are bought and sold like stocks throughout the day.

Why should you trust them?

Since Sarwa works with a brokerage firm/custodian bank called Interactive Brokers based in the U.S., all accounts are insured by SIPC for up to $500,000 in cash and securities, including up to $250,000 in cash. They also use state-of-the-art security measures to make sure your information is safe at all times.

As a financial services company here in the UAE, they are regulated by the Dubai Financial Services Authority (DFSA) who holds some of the highest consumer protection standards in the financial sector. They hold a full category 4 license.

They are backed by the largest Venture Capitalists in the region such as MEVP, a company with hundreds of millions of Assets Under Management.

What makes Sarwa different?

Low Minimum Amount to Start Investing: $500

Low Fees: $500 to $50 K account, you pay 0.85%/year, Over $50K – 0.7%/year, Over $100K – 0.5%/year
No entry or withdrawal fees.

Different Account types: Conventional Portfolios, Joint Account Portfolios, Halal Portfolios, Socially Responsible Investment (SRI) Portfolios

On Demand Financial advice: Sarwa gives investors access to consultations with a financial advisor and continuous customer support via chat, emails, whatsapp and calls.

Smart Rebalancing: When your asset allocations move away from your desired portfolio allocation, Sarwa will automatically rebalance your portfolio. This will take place semi-annually or when the drift (absolute variance) of your portfolio reaches 12%, with the consent of the investor. A portion of an over-performing asset will be sold, and the proceeds reinvested in an underperforming asset. This is a process that also enables you to “buy low and sell high” on an ongoing basis.

Automatic dividend reinvesting: This feature lets you maximize the benefit of compounding of investment earnings.

Additional Features: Few minute sign-ups, auto-depositing, no lock-in period, tax optimization.
Currently Sarwa reimburses bank transfer fees to offset the impact of the bank charges on your wealth growth.

Their Approach

They use a time-tested investment philosophy to help build the portfolios and seek to deliver long-term market returns with significantly less volatility through market ups and downs. Optimal portfolios are identified using Modern Portfolio Theory (MPT) and combine a broad set of asset classes, each usually represented by a low-cost, passive exchange-traded funds (ETFs).

The platform launched in 2018 with an investing strategy based on more than 50 years of advancing research in MPT. The result was a portfolio strategy composed of ETFs with customizable risk management.
They start from a large database of ETFs and only consider ETFs from reputable ETF managers (e.g. Vanguard, BlackRock). The ETFs are picked base don a mix of low fees, high liquidity, and historical performance.

They continuously monitor and periodically rebalance portfolios to ensure they remain optimally diversified.

How much does Sarwa cost?

They have one simple advisory fee of 0.85% that make this new approach to investing affordable and convenient. It is based on the balance of your account, billed monthly. This fee goes down to as low as 0.5% for larger accounts. Customers also pay a fund fee of about 0.1%, which is built into the funds held in the portfolio and hence needs to be passed on. Although this isn’t a fee charged by Sarwa, they still make a point to disclose it to give a comprehensive view of what you’re paying.

Is Sarwa a good choice for UAE expats?

Sarwa takes the headache out of investing for people living and working in the UAE. They are based in the Dubai International Financial Centre (DIFC) and when you travel abroad your account remains in the custody of their brokerage partner, Interactive Brokers.

The platform makes it simple to monitor investments from other countries or even transfer your account to another provider further down the line if you are planning on leaving the UAE.

A bonus for Dubai Expat Blog readers:

Dubai Expat Blog readers will receive $50 back when funding an account with Sarwa. Visit their register page and enter promo code: Dubaiexpatblog20 when prompted. Minimum account requirements: $500. Offer valid till December 31, 2020.