Best investment performance for high-risk investors (March 2021)

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A high-risk investor is typically someone who will tolerate the ups and downs of the stock market, knowing that over the long-term this gives them a better chance of getting the best returns. You will not lose sleep if your portfolio falls by up to 30% in any one year, for example. (Although we know you won’t enjoy it!)  On the flip side, it can of course also go up by similar dramatic amounts in any one year.

If you are investing with a timeframe of at least 7 years, and more likely 10+ years, and you are looking to maximise returns, this could be for you.

The investment industry will usually say this high-risk investor should aim to have up to 100% of their money invested in shares. Minimal amounts may be allocated to cash or bonds along the way as a short-term tactical response to markets. 

Robo advisers have emerged onto the scene as simpler, easy ways for less confident investors to get started, buying the equivalent of an investment ‘ready-meal’. Once they know your risk profile, they do all the selection, blending and maintenance for you. 

 

So who is any good?

Boring Money is tracking the performance of 10 leading providers of robo advice or ready-made portfolios. We show here the performance rankings for the first three months of 2021.

Three months is not enough to assess skill. Over this time, the best provider made a gain of 5.1% after costs and the worst provider made just 0.5% after costs.

More telling is the longer timeframe for which we have data – the column which shows growth from January 2020 to end March 2021. We have shown here total returns over this most recent 15 month period, after all costs and charges have been deducted.

It is also worth noting the % of these portfolios in shares – we would expect those with a higher weighting to shares to have done better over these periods in question.  Wealthify and Santander have the lowest allocation to shares in this cohort so we would not expect them to head up this highest-risk pack.

As we continue to collect data, and our track records increase, we will able to show you with greater confidence which groups are doing a good investment job.

Nutmeg, Vanguard, HSBC and AJ Bell performed relatively well in both periods, when markets behaved quite differently. This can be seen as one indicator of skill and tactical positioning.

 

High-risk investment portfolios and funds

Interestingly – and as a side note - of all the robo advisers which we track, the Wealthify Ethical Adventurous portfolio was the highest performer over this fuller 15-month period returning a decent 13.2% after all charges. The Q1 story has been less kind to portfolios which will typically exclude or underweight sectors such as oil and airlines. As these sectors rebound, ‘sustainable’ or ‘ethical’ portfolios are not performing as well and so have had a worse Q1 2021. The longer-term view however is more positive.

 

Next steps

We have picked a range of leading ‘ready-made’ portfolios from providers with whom we have test accounts or who share data with us. You can open an ISA or DIY pension with these providers and set up your one-stop shop investment inside this account.

You can visit our Best Buys tables here to learn more about how other investors rate these providers and what the overall service is like.

 

Or check back in July for the Q2 performance!

 

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