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Holly's Blog: The best investment returns - and why we all need a twiddler

By Mike Narouei, Content Producer at Boring Money

16 April, 2021

Robo advisers and ready-made portfolios have slowly been edging their way into our investment choices, filling a gap for those of us who can’t – or who can’t be bothered to - pick and manage our own portfolios.

Robo advisers and ready-made portfolios have slowly been edging their way into our investment choices, filling a gap for those of us who can’t – or who can’t be bothered to - pick and manage our own portfolios.

At Boring HQ, we have now started a more formal process to collect performance data across three different risk profiles. The data we’re sharing here looks at both the first three months of 2021 but also the longer period from January 2020 to end March 2021. Not long enough on which to truly assess and identify skill – but long enough to start to give a steer.

We’ve picked the main providers of ‘ready-made’ portfolios and those who readily publish data or have agreed to share it with us.

The best high-risk returns since January 2020 have been 12.5%

In this blog, I’m showing the highest-risk portfolios available – for most this means 90%-100% in shares although a couple don’t go so spicy.

The following table shows you performance of the top 6 since Jan 2020 – after all platform/administration and investments charges – and the performance rankings for the last quarter for comparison.

  • In the last three months, high-risk portfolio returns after charges have ranged from 0.5% to 5.1%.

  • Since Jan 2020, amongst the fuller group with more than 90% in shares, there has been a substantial gap of 6.3% between the best and worst performer.

  • The top performers since January 2020 have been Nutmeg, Vanguard and HSBC, returning 12.5%, 11.6% and 11.3% after all costs.

  • In a different category so not included here, the very best performer we’ve found over the last 15 months has been the Wealthify Ethical Adventurous portfolio which returned 13.2% after charges.

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Click through to our website to see the top 10 providers and associated returns for low-risk, medium-risk and high-risk portfolios.

Although our formal data records only go back 15 months, it is notable that AJ Bell, HSBC, Nutmeg and Vanguard come in the top 6 performers for all three risk profiles across the longer 15 month period. And both AJ Bell and HSBC also come in the top 6 for all three risk profiles in both the 15 month period and the most recent three months.

So what?

The stock market in Q1 was propelled by very different thing than it was in 2020. In 2020 it was all about tech and growth stories. Elon Musk and San Francisco. The UK was unloved and no-one was using any oil or flying. Then in November, it was Vaccine Time and once we’d all celebrated, suddenly we could imagine some semblance of normality returning and the unloved, uncool stuff (called ‘Value’ companies) came back into favour. And we started gobbling things out of the earth (‘commodities’) again to fuel our greedy, acquisitive, capitalist lives. US bond yields went up. And previous no-go areas like smaller UK companies seemed viable again.

In other words it was all change.

Any investor who effectively outsources the management of their money to a third-party wants them to tweak and fiddle as things move around us. This is called ‘discretionary’ management. We don’t want someone to just set and forget. That’s why I find it super interesting to look at who did well in both 2020 and Q1 2021. It isn’t fool proof – but it does suggest they are responding to markets and twiddling accordingly. This short-term positioning – much like a chef adding a dash of salt, a sprig of parsley, a bit more sugar - is what the guys in suits call ‘tactical asset allocation’. (ie Twiddling).

What next?

It’s hard to make this call! I’m not really a fan of bonds. I think the case for smaller companies (small caps) continues to be interesting. And the UK is marching on – my ‘boring’ FTSE100 tracker is doing quite well. That said I think there’s a bit of steam in global growth markets left yet. The pendulum will probably swing between value and growth over the next few months which – I think – makes the case for having a good Twiddler on our side. Someone who can respond to markets which are rejuvenating in some areas, and having a final melt-up in others.

We’ll be reporting on this performance every quarter – as our records grow, we’ll be able to get more confident at calling out skill over luck. Next week I’ll be writing more on digital advice  – a growing way to get low-cost advice and aforementioned twiddling from a pro, without the associated price tag. A sort of half-way house between a robo adviser and a traditional adviser.

Over and out for now, have a great weekend everyone. We are heading out for a pub meal in our ski gear, umbrellas in hand. YAY.

Holly