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

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A medium-risk investor is typically someone who will tolerate some ups and downs on the stock market, understanding that any shorter-term falls are part of the experience that they are prepared to stomach, in pursuit of longer-term gains.

If you are investing with a timeframe of 4-7 years, or if you are looking for more oomph than cash but not the more extreme volatility of global stock markets, this could be for you.

Just make sure you are not doing the investment equivalent of picking the third cheapest wine on the menu! This shouldn’t just be seeking safety in the middle of the pack – it should be because it is the right approach for your timeframes, and ability to stomach volatility. It could also be that your focus is as much on trying to preserve what you have as well as growth.

The investment industry will usually say this medium-risk investor should aim to have about 40-60% of their money invested in shares. The rest is typically in less volatile ‘bonds’ and cash.

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 11 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 3% after costs and the worst provider made a loss of 1.6% 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 mid-range pack. Moneybox does not have an option in our 40% - 60% range so this arguably gives them an unfair advantage here.

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.

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.

 

Medium-risk investment portfolios and funds

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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