Robo-advisors vs. Actively Managed Funds

by  Jean Chan | 15 October 2025 | 4 min read

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Key Takeaways at a Glance

  • Robo-advisors offer low-cost, automated investing using passive strategies.
  • Active mutual funds involve professional managers making research-led market decisions.
  • Robo-advisors are suitable for hands-off investors with long-term horizons.
  • Active mutual funds suit those seeking alpha, dynamic reallocation, and expert insight.
  • Combining both can provide core stability and tactical growth.

Introduction

Choosing between robo-advisors and actively managed funds is no longer just a beginner’s dilemma—it’s a decision seasoned investors face when refining their portfolio strategy. As investing becomes increasingly digital and global, the contrast between algorithm-driven passive models and high-conviction active management is sharper than ever.

This article sets the foundation for understanding both approaches—how they work, whom they suit, and where they fit within a wealth portfolio. In future articles, we’ll explore themes like hybrid investing, how digital tools are reshaping discretionary portfolio construction, and evolving investor behaviours across passive and active frameworks.

What do robo-advisors actually do, and who are they for?

Robo-advisors are digital platforms that automate portfolio allocation using algorithms. They typically rely on passive investment strategies, allocating capital across ETFs, index funds or REITs based on your risk profile and investment goals.

In Singapore, robo-advisors like StashAway, Endowus, Syfe, DBS digiPortfolio and OCBC RoboInvest offer diversified, globally allocated portfolios with low fees and minimal intervention. Internationally, platforms such as Betterment, Wealthfront, and Schwab Intelligent Portfolios have set the standard in low-touch, passive investing.

Ideal for Pros Cons
Investors new to the markets Low fees No tactical adjustments during market shifts
Those who prefer low-cost, hands-off strategies Automated rebalancing Limited customisation
Long-term savers seeking steady accumulation Efficient and easy to set up Passive by design, which may underperform in volatile markets

What makes actively managed funds different from robo advisors?

Active mutual funds are professionally managed portfolios where fund managers aim to outperform the market by actively choosing securities, adjusting allocations, and responding to macro trends.

These funds often involve deeper research, market timing, and sector rotation strategies. For example, active fund managers may reduce equity exposure during downturns or overweight sectors expected to outperform.

Ideal for Pros Cons
Investors seeking alpha Adaptive to market changes Higher management fees
Those who value professional oversight Potential to outperform benchmarks Performance may vary by manager
Clients willing to pay higher fees for potential outperformance Access to manager expertise Potential underperformance in efficient markets

How do the two compare in real-world portfolios?

Attribute Robo-Advisors Active Mutual Funds
Cost Low Higher, with performance upside
Control Algorithmic decisions Manager discretion
Risk Adjustment Rule-based Active and reactive
Return Potential Market-tracking Benchmark beating (if successful)
Best Fit Simple, long-term investing Tactical and thematic allocation
 The Citi Advantage

Citi can help you access leading global fund managers and offer digital tools to compare performance, strategy, and fit—all within a Citi Wealth relationship.

How do you decide between the robo-advisors and actively managed funds?

Start by asking:

  • Do you prefer automation or personalisation?
  • Are you targeting market returns or trying to beat the market?
  • How active do you want to be in your portfolio oversight?

Many investors benefit from a hybrid approach—using robo-advisors for core allocations and active mutual funds for tactical, high-conviction plays.

Which strategy fits your wealth journey best?

Each approach serves a purpose. The key is understanding your needs.

Use robo-advisors to cover broad-based, passive allocations. Use active funds to express strategic views, manage downside risk, or pursue high-conviction ideas.

 Jean Chan | Traditional and Portfolio Specialist, Citi Wealth

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