High-risk robos - what are they and who are the top performers?
27 Jan, 2022
What is a robo?
A robo adviser is basically an online investment platform that manages a portfolio of investments on your behalf.
How does it work?
You answer about 10-15 questions, then your robo adviser will allocate a suitable basket of investments (the portfolio) and will manage it for you.
If you're comfortable taking on more risk
If you're happy to take a gamble in exchange for potentially bigger returns, you may want to consider a robo portfolio in the higher risk category.
Just to recap: what exactly is 'high risk'?
The financial industry has an annoying habit of throwing around terms like 'high risk' and 'low risk' as if they always mean the same thing to every person. In truth, investment platforms have slightly different criteria for determining which risk category to assign to their investment portfolios.
So for clarity's sake, here's a quick overview of what a high-risk robo portfolio should look like and what you might expect in terms of performance.
If you're a high-risk investor, you'll be investing most of your money in company shares.
That means you'll be much more exposed to the 'ups' and 'downs' of the market
Our recent robo data show that people who invested in ready-made or robo high-risk portfolios got the best bang for their buck in the last two years.
But be prepared. There's a higher chance that you may lose all your money compared to low- or medium-risk portfolios.
High-risk investing is not a good option for people looking to put their money away for a shorter period (i.e. 3 years), because if you need to withdraw your money when the market is swinging in the wrong direction, you may lose more than you put in.
Common adjectives used to describe this type of robo portfolio include adventurous, aggressive or simply 'high-risk'.
Three reasons to pick a robo adviser if you're a high-risk investor:
You get a diversified portfolio managed on your behalf, which may help you earn better returns in the long run
Boring Money research shows that high-risk robos are outperforming other portfolios in the same risk category
A robo can take out the emotion, 'short-termism' and 'impulse buying' that often comes with DIY investing.
So, here are the top-performing robos in the higher risk category in the last two years:
Figures shown after total returns (after charges) from 01-01-2020 to 31-12-2021.
In first place: Moneybox - Adventurous fund
Two-year returns (after charges): 29.31%
Fund summary: 80% of this fund comprises the Fidelity Index World Fund, while 15% is iShares Global Property Equity and 5% is iShares Overseas Corporate Bond Index.
Moneybox is a great mobile-first option for adventurous newcomers who aren't too bothered about how their money is managed.
In our 2021 Best Buy Awards, Moneybox won:
Best Buy ISA 2021
Best for Beginner Investors - ISA
Best for Digital - ISA
Best for Customer Service
(read the full list of winners here)
Two-year returns (after charges) for Moneybox Adventurous portfolio in context:
Figures shown after total returns (after charges) from 01-01-2020 to 31-12-2021.
Setting up a robo portfolio with Moneybox
How does it work?
Start with just £1
Costs range from roughly 0.57 - 0.75% a year, plus a £1 subscription fee per month.
The adventurous one has slightly higher charges than the balanced and cautious options, due to its bigger share %
Moneybox reviews
Runner up: HSBC My Investment - Adventurous - Fund 5
Two-year returns (after charges): 29.12%
HSBC is one of the biggest and best-known banks in the world, so it’s often considered a safer bet for investors happy to take on more risks.
Fund summary: The overwhelming majority of this fund is shares (87%), followed by property (9%), cash (2%) and bonds (2%).
Two-year returns (after charges) for HSBC My Investment adventurous portfolio in context:
Figures shown after total returns (after charges) from 01-01-2020 to 31-12-2021.
Setting up a robo portfolio with HSBC My Investment:
How does it work?
Get a personalised investment recommendation report
Start investing from only £50 a month or a lump sum of £1,000
You'll pay a one-off advice fee of 0.5% (figures shown above include charges)
HSBC reviews
Second runner up: Vanguard LifeStrategy - 80% shares
Two-year returns (after charges): 27.39%
Fund summary: 80% shares, 20% cash.
This is a huge global player, so some might see it as a safer pair of hands for higher risk investments. It's also a good option if you've tried the DIY approach but would prefer to put your money in the hands of the experts.
In our 2021 Best Buys Awards, Vanguard won:
Best Buy ISA
Best Buy Pension
Best for Beginner Investors
Best for Beginner Investors - Pension
Best for Low Cost - Pension
Read the full list of winners here.
Two-year returns (after charges) for Vanguard LifeStrategy 80% shares fund in context:
Figures shown after total returns (after charges) from 01-01-2020 to 31-12-2021.
Setting up a robo portfolio with Vanguard:
How does it work?
£500 initial monthly investment, £100 minimum monthly amount
Total charges are about 0.41% for an investment of £1,000 (figures shown above are after charges)
Vanguard reviews
Fourth place: Vanguard - LifeStrategy - 80% shares
Two-year returns (after charges): 22.87%
About Vanguard: As stated above, Vanguard is a huge global player, and if you'd prefer your risk level to be low-to-medium level, this is a good option.
Fund summary: This fund is 80% shares and 20% cash.
In our 2021 Best Buys Awards, Vanguard won:
Best Buy ISA
Best Buy Pension
Best for Beginner Investors
Best for Beginner Investors - Pension
Best for Low Cost - Pension
Read the full list of winners here.
Two-year returns (after charges) for Vanguard LifeStrategy 80% shares portfolio in context:
Figures shown after total returns (after charges) from 01-01-2020 to 31-12-2021.
Setting up the Vanguard LifeStrategy 80% shares robo portfolio
How does it work?
Like the 100% shares fund, you need to make a £500 initial monthly investment and a put in a minimum of £100 a month
Total charges for this fund, as with all Vanguard LifeStrategy funds, is about 0.41% for an investment of £1,000 (figures shown above are after charges)
Vanguard reviews
Fifth place: Nutmeg - 8/10 portfolio
Two-year returns (after charges): 22.39%
About Nutmeg: It's the world's first and largest robo adviser, shaping the scene since 2012. Great for busy people on-the-go, and high-risk investors will appreciate having more data to play with compared to the new robos in town.
Fund summary: This fund is 83.3% shares.
In our 2021 Best Buys Awards, Nutmeg won:
Best Buy ISA
Best for Beginner Investors - ISA
Best for Sustainable Investors - ISA
Best for Sustainable Investors - Pension
Best for Digital - ISA
Read the full list of winners here.
Two-year returns (after charges) for Nutmeg 8/10 portfolio in context:
Figures shown after total returns (after charges) from 01-01-2020 to 31-12-2021.
Setting up the Nutmeg 8/10 portfolio:
How does it work?
You'll need to put in at least £500 for an ISA, pension or investment account (£100 minimum for a Lifetime ISA or Junior ISA).
You can arrange a call with their client services before setting up your account.
Other things to bear in mind when picking a robo/ready-made portfolio:
- Will it make your life easier?
- How much time will you save?
- What are the total fees? (ideally you shouldn't be paying more than 1%!)
