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Many of you have asked me about sustainable investing and how they should invest in Sustainable Instruments. Specifically, many have asked which Robo-Advisor they should use for sustainable investing.
The two main Robo-Advisors for sustainable investing in Switzerland are Selma Finance and Yova. So, today, we are going to compare Selma vs Yova for easy investment in sustainable companies.
Both Selma and Yova allow for sustainably investing your assets. But both have different approaches, limitations, and fees. When you want to invest with a Robo-Advisor, you want to select the best Robo-Advisor for your needs. So, let’s see which of Selma or Yova you should use if you want to invest sustainably in Switzerland.
I am going to compare Selma vs Yova on different factors. We are going to check their fees, their investment minimums, and their investing strategies.
Keep in mind that I do not invest in Robo-Advisors and do not focus on sustainable investing.
Before we talk about Selma vs Yova, let’s start with the big question: what is sustainable investing?
Sustainable investing is an investing strategy where you only invest in instruments that are sustainable for the future. This strategy is a way to invest only in things that will have a positive effect on the world and its society.
Here are some examples of things you can avoid when investing sustainably:
- Fossil fuel companies
- Weapon companies
- Alcohol and tobacco companies
- Nuclear energy companies
On the other hand, here are some companies on which you can focus more when investing sustainably:
- Solar energy companies
- Waste reduction companies
- Electric car companies
- Self-sustainable housing companies
There are a few other names, such as impact investing, green investing, ethical investing, or eco-investing. But another big name that you may have heard is ESG investing. ESG stands for Environment Social and Governance. These are not the same things, but they fall under the same philosophy.
These last few years, Sustainable Investing has become more and more popular. There are now many mutual funds, ETFs, and Robo-Advisors that follow this form of investing.
People have two main reasons for investing like this:
- Some people want to invest their money in companies that work on improving the world. Or they do not want to invest in companies that supposedly hurt the world like the weapon industry, nuclear power, or gas companies.
- Some people believe that sustainable investing will yield more returns in the future. They believe that many companies that are not sustainable now will fail in the future, and as such, it is better not to invest in them now. Contrary to the first reason, this is an optimization for returns.
That is enough of an introduction for this comparison. If you want to learn more, I have a complete article about sustainable investing.
If you want to invest in sustainable instruments and prefer to use Robo-Advisors, you will want to choose the best Robo-Advisor for your needs.
So, let’s start comparing Selma vs Yova.
Let’s start with Selma Finance. It is a Swiss Robo-Advisor that is focusing on a personal assistant within the service. They are creating a custom portfolio for their investors based on questions that they ask you.
They are a relatively new company. Selma was founded in 2016. They have been very successful since. They now have more than 1500 customers and are managing a large portfolio in the 7-digit range.
Selma Finance does not solely focus on Sustainable Investing. But, they have an option to select only ETFs that will invest in sustainable instruments. So, with Selma, you can invest either in the standard stock market or in the subset that is the sustainable stock market.
You will access Selma with their web interface.
I have already talked about Selma in the past, and for more information, you can read my review of Selma.
Yova is another Swiss Robo-Advisor entirely focused on impact investing. To my knowledge, it is the only Swiss Robo-Advisor that only focuses on sustainable investing. They do not offer investment services for people that do not want to invest sustainably.
Yova is a new company. It was founded in 2017. But they have been growing quite quickly since their inception. They have secured more than four million in investing.
Contrary to most Robo-Advisors, Yova is not investing in ETFs but directly in stocks. And they are not replicating an index either. Yova is using a custom strategy to select sustainable companies. So your portfolio will directly be composed of shares of companies that are doing an excellent job in being sustainable.
The reason they are using this technique is that there are many controversies against sustainable ETFs. The criteria used for sustainable ETFs are very simple, and many questionable industries are part of these indexes.
You can do a few things to customize the investing strategy by choosing some companies you like or do not like and some things you are interested in. Your preferences will be taken into account in your portfolio.
You will be able to access your portfolio from the web interface. But, Yova will soon release a mobile app, before the end of 2020.
Let’s start by comparing the investing strategies of Selma vs Yova.
While they are both Robo-Advisors, they are doing something entirely different.
Selma Finance is investing in Exchange Traded Funds (ETFs). It means that your portfolio will be a collection of ETF with different allocations. For sustainable investing, they are following the ESG criteria.
For the ETFs, they are selecting the Socially Responsible Investing (SRI) indexes. These are indexes by MSCI. For instance, there is the standard MSCI Europe index, and the ESG equivalent is the MSCI Europe SRI Index.
With Selma, you will have a great diversification since the ETFs will invest in many companies, all following ESG criteria.
Yova has a very different strategy. They do not use ETFs. It means that your portfolio will be composed directly of stocks. Also, they do not use a standard approach like ESG, but they use their custom criteria to assess companies.
Yova’s strategy is based on the handprint (products and services) and the footprint (way of doing business) of companies. You can learn more about their approach in their whitepaper.
Yova’s approach is going much further than the ESG approach. They are looking at the impact of the companies on the world, not only on the way they work.
From a pure investing point of view, Selma’s approach is better than Yova’s. There are two reasons for that. First, with Selma, you will have better diversification since you will have significantly more stocks in your portfolio. And Selma Finance is based on passive investing, which is the way I prefer to invest.
Of course, Yova is still diversified. You will always have between 30 and 40 stocks in your portfolio. And they are trying to diversify across regions and industries. However, this is difficult to compare with pure passive investing.
Now, as we are going to see in the next section, there are some limits to sustainable passive investing.
Which is more sustainable? Selma vs Yova
From a sustainability point of view, it is challenging to compare Selma vs Yova since they are using very different strategies.
As mentioned before, Selma Finance is using ETFs that are following the SRI indexes from MSCI. Socially Responsible Indexes (SRI) go one step further than ESG investing. So, it is considered more sustainable than merely following the ESG principles.
With Yova, they are picking stocks based on their impact investing criteria. They are using strong factors to decide which companies they should invest in each portfolio. Some of their criteria are the same as ESG criteria. But they have other rules that go further as well. In general, they are going much further than simple ESG criteria.
One thing that is interesting with Yova is that you can customize your portfolio. You can exclude some businesses from your portfolio. For instance, you can decide you do not want to invest in companies that do animal testing.
With sustainable investing, we can see the limits of passive investing. For instance, several ESG and SRI indexes are investing in mining and oil companies. You can also see Alibaba in some of the sustainable indexes. If you take a sustainable point of view, we can see that Alibaba should not be part of such investing. Another example is the presence of many companies that produce plastic bottled water, which is a plague for the environment.
It is also interested to note that Yova has been endorsed by the World Wide Fund for Nature (WWF). This endorsement should show that they are working for a better future!
For me, Yova has a higher quality of sustainable investing. Also, with Yova, you can customize your portfolio to your values. This feature means you can focus on your personal view of Sustainable investing. So, Yova is also much better for customization.
Now, Selma is still good, but they take the minimalist approach. Considering that they are a passive investing Robo-Advisor, they are also selecting the best ETFs available.
Most people that want to start investing with Robo-Advisors are people that are afraid of investing or are starting with investing. It means that they are generally not ready to invest large amounts of money.
Therefore, it is essential to be able to start with small amounts of money. For this, we can compare the minimums of Selma vs Yova.
On this side, it is easy to compare them. Both Selma and Yova have a minimum investment of 2000 CHF. So, they are both good here. I still think this is slightly too high for some people. A limit of 1000 CHF would probably be better. But 2000 CHF is not a high limit either. And very small portfolios are difficult to rebalance.
Fees – Selma vs Yova
When you want to invest for the long-term, you want to pay as little fees as possible. In the long-term, minimizing fees is important. When you compare services, you need to make sure to take all the small details into account.
Fortunately, both companies are quite transparent about their fees. So, let’s compare Selma vs Yova in terms of investing fees.
Let’s start with Selma Finance. They have a management fee of 0.68% per year. This fee will pay all the fees for Selma. On top of that, you still need to pay the fees of the ETFs. For sustainable ETFs, you will pay about 0.3% per year in fees. So, this gives us a total of 0.98% in fees per year. This fee is not negligible.
Yova has a different approach to pricing. Since they are not using ETFs, they do not have any fees for the management of the assets. So the Yova fee is all-inclusive. The price is different based on how much money you have invested in your portfolio with Yova:
- From 0 CHF to 49’999 CHF, 1.2% yearly fee
- From 50’000 to 149’999 CHF, 1.0% yearly fee
- From 150’000 CHF to 499’999 CHF, 0.8% yearly fee
- From 500’000 CHF, 0.6% yearly fee
If you invest more than half a million with Yova, the fee will be excellent. Below that amount, the fees will not be great. And this is the amount invested, not the current value of your account. If you invest 40’000 CHF and get 12’000 returns, it will not change the fee to a lower fee. It makes a significant difference!
If you have more than 150’000 CHF invested with Yova, it will be cheaper than Selma Finance. If you are serious about investing, you will probably reach this amount. However, you will probably start investing with much less. And that means you will pay a hefty fee for perhaps several years.
For me, this means that Selma has better fees than Yova, especially for starting investing. Now, if you are planning to invest a very large amount of money (more than 150K CHF) since the beginning, Yova will be cheaper indeed.
Security – Selma vs Yova
If you are going to invest a significant amount of money, the security of a Robo-Advisor is fundamental. So, let’s compare the security of Selma vs Yova.
Selma Finance is regulated as an independent financial advisor. They are using Saxo Bank as a custodian bank. It means that all your assets are registered in your name at Saxo bank. If Selma goes bust, your assets are safe.
Yova is regulated as an asset managed. They are also using Saxo Bank as a custodian. So, again, if Yova goes bankrupt, your assets are safe.
From a regulation point of view, both Selma and Yova offer the same amount of security. You are protected by the custodian bank holding your assets. And the custodian bank is the same in both cases and is regulated as well.
We can also compare the technical security of Selma vs Yova.
Both services are offering SSL encrypted access. And I have not found any record of breaches with either of these companies. However, only Selma offers Two-Factor Authentication. So the technical security of Selma is significantly better than Yova’s.
Online security is paramount, read how to protect your online personal finances.
Summary – Selma vs Yova
Let’s do a quick summary of the Selma vs Yova results.
|Investing Strategy||Best – ETF||Worse – Stock picking|
|Ease of use||Easy||Easy|
|Interface||Only web||Only web (Mobile Coming)|
|Technical Security||Good||Average (No 2FA)|
There are some pros and cons to both services.
If you are looking for a service entirely focused on sustainable investing, Yova is probably your better bet. However, the lack of Two-Factor Authentication (2FA) with Yova worries me. I would not invest any significant amount of money in an online service without 2FA.
Now, if you prefer to focus on the investing side, Selma is a better candidate for a sustainable Robo-Advisor. This result is based on the lower fees and the better investing-strategy (no stock picking).
If you are looking for extreme customization, you may want to go with Yova. You will be able to choose companies yourselves based on a lot of criteria. But if you are not against stock picking, you could probably simply use a broker to pick the stocks you want. You will divide your fees at least by ten by doing so!
To conclude the Selma vs Yova question, Selma Finance is a better fit for sustainable investing in most cases. Its fees are better unless you invest a substantial amount of money. And they offer more diversification since they are using ETFs and are not picking stocks themselves. Also, they offer 2FA, which should be the bare minimum in terms of security.
On the other hand, Yova will offer you better sustainability and greater customization. You will be able to choose some factors that you do not want to see in your portfolio. If you feel strongly about some things (like no animal testing), Yova could be a good fit for you. Just know that when you are getting started, the fees are high.
I am not investing in sustainable instruments myself. But if I were to do so, I would choose sustainable ETFs. And if I were to use a Robo-Advisor for sustainable investing, I would go with Selma Finance for passive investing and the lower fees.
But I understand the need to go further than simple ESG/SRI investing. It is where Yova shines. They are built entirely to try to provide greater sustainability to the investing world. With Selma, sustainable investing is an add-on while sustainable investing is the foundation of Yova.
I will try to dedicate a future article on all the different notions of sustainable investing. But I wanted to cover Selma vs Yova first since this is what my readers asked me the most.
If you want to learn more, read my article about Robo-Advisors and whether or not you should invest with them.
If any of you tried any of these services, I would love to hear about their experience.