What Is Sarwa and How Does It Work?

Sarwa CEO, Mark Chahwan, takes some time out to explain what Sarwa is and how it works – and why Sarwa is such a great home for you and your money.

You may have heard a little about what we do here at Sarwa. But you might still be a little confused. So here’s a quick guide to what we do and how we do it.

Put simply, what does Sarwa actually do?

Sarwa is an online financial advisor that aims to take all of the stress out of investing. We help you maximise your returns, at a level of risk that you’re completely comfortable with.

We do this by matching you with a personalized portfolio of diversified, low-cost index funds. Once your money is invested, we use automated rebalancing to keep your investments on track as financial markets change over time. And we charge very low fees to do it.

OK, that’s simple. But how does it actually work? For example, how do I actually become a Sarwa customer?

We’ve made it incredibly easy.

All you have to do is go to the Sarwa website and answer some quick questions that will help us understand you, your time horizon, and your investment experience (if any – none is required to get started). This allows us to match investments to your financial profile. We then build you a globally diversified portfolio of low-cost index funds.

Once your account is open, we work with our selected partner Saxo Bank, a leading Fintech and Regtech specialist, to give you a seamless funding and investment experience. We support local transfers in both AED and USD  – so UAE clients have free local transfers from their AED bank account to their Sarwa account without incurring international transfer fees. Once you’ve funded your account – you can leave the rest to us to help you with automated rebalancing, dividend reinvesting, and portfolio monitoring.

And the best part? All of this can be done in 5 minutes from the comfort of your home. You don’t need to talk to any financial advisor, but if you’d like to – we have a team of experts that would love to help you out with a wealth discovery call or coffee chat.

That does sound easy but I know nothing about investing. So how do I go about choosing my investments?

That’s a totally fair question. The great thing is that you don’t need to know anything about investing. We do all the hard work for you.

At Sarwa, we use a method of investing called ‘passive investing’. Passive investment management is the opposite of active management, where an investment manager tries to pick investments that they think will outperform the market. Studies have shown that investment managers who try to beat the market often fail, with only a third ever beating the market benchmark that they’re measured against.

Passive investments became popular because many investment managers and active investors underperformed the market in the long run. Thus, instruments were created aimed to match the performance of a specific market or sector as a whole. To do this, the chosen investments tend to closely track an index.

Passive managers do this by buying and holding all or a representative sample of the securities in the index. That’s why passive investments are often called index or tracker funds. These investments have one objective: to match a specific index. They never try and beat it.  

At Sarwa, we make accessing these passive investments as easy as possible for you. Even if you aren’t a financial expert, it’s really straightforward. Once you’ve gone online and completed a couple of questions, we have a good understanding of your attitude to risk. This means we can build a portfolio that’s right for you, which will consist of low-cost, passive investment products like ETFs.

Our technology automates the investments, ensuring that your portfolio ‘rebalances’, so it stands the best chance of performing well as financial markets and the world changes around us.

You mention ETFs. What are they?

Exchange-traded funds are low-cost investment funds that enable us to generate maximum returns with minimum costs. We truly believe they are the most efficient way our customers can benefit from diversification.

Here’s an example of an ETF. Say you want to invest in stocks in the S&P500 Index. Instead of buying each of the 500 stocks, an ETF does the hard work, buying the stocks and tracking the S&P500 Index. All you have to do is buy the ETF, which is less time consuming and far cheaper.

Crucially, here at Sarwa, ETFs give us a load of flexibility. They enable us to adapt to market conditions without incurring excessive costs that could eat into your returns. We do this by using ETFs with low costs.

Also, we’ve worked with world-renowned financial experts who have helped us to build portfolios of ETFs that are truly diversified. This helps to reduce the risk and optimise the returns for you.

OK, got it. So is Sarwa a robo advisor?

We like to think of ourselves as a hybrid that gives our users the best of robo-advisory combined with the best of old fashioned, human-led financial advice.

Robo-advisor is a term that is used to describe an investment strategy with very little human interaction. At Sarwa, our portfolios have been built by smart humans who build algorithms that set up your investment strategy. Once set up, our algorithm keeps the portfolios on track. Using technology removes the emotion out of the equation, and always keeps cool whatever global financial markets are doing.

Crucially, however, at Sarwa, we always have humans overseeing the technology that we employ and we’re always here on hand ready if you want to make a change or just ask a question.

All of this technology must be expensive, right?

Wrong. Not only is our service good value, but we are also transparent about what we charge and when we charge it.

There is only one simple advisory fee that we charge our customers. This is an annual advisory fee of 0.85% on the balance of your account and this is billed monthly.  The only other fee you pay for is a fund fee at about 0.1%. This is not a Sarwa fee, it’s charged by the providers of our ETFs, but we like to disclose it to give you a full picture of your costs.  We’ve built the lowest cost advisor and a sustainable business, enabling us to serve you over the long term.

That is good value. But there are quite a few companies doing what you do, so what makes Sarwa special?

Our unique proposition sets us apart from the crowd.

Our fee is the lowest in the region when compared to our peers. Our technology also offers benefits like auto-rebalancing, which means that the way that we can invest your money is seamless and gives you the same level of service that you would get if you were accessing an institutional investment manager.

However, what we think sets us apart is the level of human expertise. We’re always here to answer any questions you might have, so you can call and arrange a catch up with one of our trusted financial advisors. It’s this combination of human interaction and personalised advice with first class technology that we think sets Sarwa apart from the rest of the crowd.

That’s pretty compelling. So I’m thinking about transferring my hard-earned cash to Sarwa. Why should I trust you?

We take the security of your money very seriously. When you invest with Sarwa, your assets are held by Citibank, the appointed custodian of our broker. So, you end up benefitting from bank-level security that way. 

This is part of what is called a segregated custody structure, where the money we use to run our business is kept separate from the money we manage for our clients. 

All the assets under Sarwa’s management are secured by an elaborate set of guardrails and protective financial measures that are typical for regulated firms – like us! 

As a financial services company, we are licensed by the DFSA in Dubai, FSRA in Abu Dhabi, and very recently, Saudi’s CMA. These regulators hold some of the highest consumer protection standards in the financial sector. We hold a full category 4 license.

It might also be reassuring to hear that we’re backed by the largest Venture Capitalists in the region such as MEVP, a company with hundreds of millions of Assets Under Management.

So, rest assured, your money is safe with us.

That does sound safe! What if I have any more questions?

As we mentioned, what makes Sarwa different is the fact that we’re real people, working hard here to make sure that you and your money are informed, safe and secure.

So we’d be delighted for you to chat on the phone or grab a cup of coffee with a member of the team whenever you like. Here at Sarwa we feel this is a really important part of our offering and we want to know who is using our product and what we can do to help them, allaying any fears and answering any questions they may have.

We know that investing can feel a little intimidating and scary. That’s why we’re on a mission to change that perception by combining cutting edge technology with the human touch. That’s why we’re making investing easy.

So why don’t you get in touch for a chat about your goals?

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