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Robo performance part 3: Low risk portfolios

15 Oct, 2021

This is the third article in the series and here we’re looking at low risk portfolios. If you haven’t already, check out the others in the series, where we explain a bit more about the project and start by looking at the performance of portfolios in the high and medium risk category.

In the low risk bracket we look at funds with between 0-40% in shares. These are the portfolios with the least exposure to the stock market, meaning they aren’t as well placed to benefit from long-term gains in global share prices, but they should also be protected from some of the volatility this brings too.

The top performer for the year so far is AJ Bell’s Cautious portfolio, with a total return of 2.4%, having delivered 1.2% growth in the last quarter.

True Potential’s Defensive option comes in second so far for the year so far, with a 1.3% return, whilst HSBC and Moneybox’s Cautious portfolios have both delivered 1.1% gains.

Since we began the exercise in 2020, the best performer, Vanguard’s Lifestrategy 20, has delivered 7.4% while AJ Bell has notched up 6%.

HSBC and Wealthsimple’s Conservative have also done well, returning 5.9% since the start of 2020. Interestingly, although the latter is one of the strongest overall, it is at the bottom of the list for 2021 year to date. It shows that even through a challenging period of short-term performance, long-term gains can still be much stronger.

Overall, you can see that these portfolios have delivered significantly lower returns than their higher risk peers. This reflects the fact that they hold a significantly lower % in shares (and therefore greater allocations to fixed income and cash) than their slightly racier cousins on the risk spectrum. As a result they are designed to deliver less noticeable ups and downs as the stock market fluctuates, but also a lower probability of making the chunky long-term gains that taking more risk can offer.

What next?

At Boring Money we’re tracking these portfolios continually to explore how they perform over time and help investors with their research. It gives newcomers an easy way to see what sort of thing they might have experienced had they been invested with these providers, and those using a robo adviser can see how the competition has done.

So keep checking up to see how things are going by signing up to Holly’s blog. In January next year we’ll take a look at performance in the final 3 months of 2021. We also plan to take a step back and show you what we’ve seen across the last two full years.

Bear in mind that although this performance information is crucial, just because a portfolio is top of the list today doesn’t mean it is automatically the best. Performance trends can change over time. The user experience is key too – is a painful customer experience worth it for an extra 0.1% return? In fact, if you use one of these portfolios and want to rate the overall service just head over to our review pages and let us know what you think. It really helps other investors just like you to decide on their choices.

Lastly, if you’re thinking of opening an account with a robo adviser and you want to learn more, check out our comparison tables here.