Robo advisers are a relatively new way to invest for people who don’t give a hoot about the minutiae of stock markets, for people who want someone else to do it for them…or even the most seasoned old dog who knows that they can’t be bothered with the ongoing maintenance of a portfolio.
Robo advisers offer an all-in-one investment journey which does it all for you. You need to choose which robo adviser you like and then take the robo's short questionnaire to work out what your risk profile is. This helps them to work out how you feel about risk and to map an appropriate collection of investments to you.
Read on below to see how we analyse and compare the performance of nine leading robo advisers which together represent over 80% of UK robo adviser assets today. The tabs above will take you through three different risk profiles. Or collections of investments which range from the more sedate cash-like stuff to the more volatile shares.
You can use these pages to get a deeper understanding of robos and see how they have performed over 2017 and 2018.
For each robo-adviser we looked at three different portfolios: a low-risk, medium-risk, and high-risk portfolio.
We have tried to keep this guide to robo returns relatively simple. You tell us you want to know how much you could make. And how much you could lose. And who is any good.
Unfortunately, investments are a bit more complex than cash. So we’d just add four things to consider.
Click through the tabs to see performance for low, medium and high risk portfolios.
If we look at just 2018, most investors saws negative return, as stock markets tumbled over the last 3 months of 2018. For example the main UK market – the FTSE 100 – fell by nearly 10% over this period. However, investing is for the longer term and if we look over 2017 and 2018, the picture is slightly more positive.
You can see that the lowest risk robos didn’t do so well as cash. And that’s because the shares bit of the portfolios has had a wobble. This should not put off longer-term investors but reminds us of why this isn’t a short-term game. We know that snapshots in time can be misleading – since the end of 2018 the main UK market is up by about 8% for example so don’t be entirely put off by these charts which cover a fairly unpleasant three months in a spooked stock market.
We compare the medium risk portfolios to a 50% Global Index. This maps what what a basket half made up of the world’s biggest shares and half made up of cash would have done. The full Global Index is compared to the high risk portfolios and shows what a basket of the largest shares from across the world would have performed.
Click through the tabs to see performance for low, medium and high risk portfolios.
The charts below show what would have happened if you had invested £5,000 over 2017 and 2018.
All the nine robo-advisers have at least a 1-year track record, and seven have at least a 2-year track record.
The 1-year performance looks at what would have happened if you invested from 1st January 2018 to 31st December 2018. The 2-year performance looks at 1st January 2017 to 31st December 2018.
Low risk portfolio returns on £5,000 invested up to the 31st December 2018
A nice thing about robo advisers is that they spread your money around. One single investment from you and your cash is spread into cash, shares, property and more - and across the globe too.
The lower risk portfolios will have more cash and bonds than shares - this means you will have a smoother ride but probably not make as much over the longer term.
As a general rule, you would expect equities (that's just another way of saying shares) to be riskier than bonds, which will also be riskier than cash. A riskier asset will typically perform better than a less risky asset over the long term.
A bumpy ride is the trade-off for potentially higher returns.
The other side of the coin to return is risk, and an important question is how much risk is taken to achieve returns. The “Drawdown” column shows the most you would have lost in one of these ‘low risk’ portfolios over 2018, assuming you had invested £5,000 at the end of the month where the portfolios were at their highest and taken your money out when they were lowest.
Low risk portfolio return, risk-adjusted return, and drawdown over the 12 months to 31st December 2018
Click through the tabs to see performance for low and high risk portfolios.
The charts below show what would have happened if you had invested £5,000 over 2017 and 2018.
All the nine robo-advisers have at least a 1-year track record, and seven have at least a 2-year track record.
The 1-year performance looks at what would have happened if you invested from 1st January 2018 to 31st December 2018. The 2-year performance looks at 1st January 2017 to 31st December 2018.
High risk portfolio returns on £5,000 invested up to the 31st December 2018
A nice thing about robo advisers is that they spread your money around. One single investment from you and your cash is spread into cash, shares, property and more - and across the globe too.
The medium risk portfolios are most evenly spread between bonds and cash and shares - this means you will have experience some bumps in the road but it shouldn't be a rollercoaster.
As a general rule, you would expect equities (that's just another way of saying shares) to be riskier than bonds, which will also be riskier than cash. A riskier asset will typically perform better than a less risky asset over the long term.
The other side of the coin to return is risk, and an important question is how much risk is taken to achieve returns. The “Drawdown” column shows the most you would have lost in one of these ‘low risk’ portfolios over 2018, assuming you had invested £5,000 at the end of the month where the portfolios were at their highest and taken your money out when they were lowest.
High risk portfolio return, risk-adjusted return, and drawdown over the 12 months to 31st December 2018
Click through the tabs to see performance for low and medium risk portfolios.
The charts below show what would have happened if you had invested £5,000 over 2017 and 2018.
All the nine robo-advisers have at least a 1-year track record, and seven have at least a 2-year track record.
The 1-year performance looks at what would have happened if you invested from 1st January 2018 to 31st December 2018. The 2-year performance looks at 1st January 2017 to 31st December 2018.
High risk portfolio returns on £5,000 invested up to the 31st December 2018
A nice thing about robo advisers is that they spread your money around. One single investment from you and your cash is spread into cash, shares, property and more - and across the globe too.
The higher risk portfolios will have mostly shares inside - this means you are prepared for a relatively bumpy ride and you won't panic about falls in any one year as this is at least a 5 year + decision. You would expect to see years where this goes backwards, but expect things to grow more over the long-term.
As a general rule, you would expect equities (that's just another way of saying shares) to be riskier than bonds, which will also be riskier than cash. A riskier asset will typically perform better than a less risky asset over the long term.
As always this is not guaranteed. But the key is really to make sure you will not freak out when the Daily Mail shrieks about stock market corrections and falls. It's par for the course.
The other side of the coin to return is risk, and an important question is how much risk is taken to achieve returns. The “Drawdown” column shows the most you would have lost in one of these ‘low risk’ portfolios over 2018, assuming you had invested £5,000 at the end of the month where the portfolios were at their highest and taken your money out when they were lowest.
High risk portfolio return, risk-adjusted return, and drawdown over the 12 months to 31st December 2018
Our free weekly blog with Holly's
no-nonsense opinions, tips & food for thought.
If you change your mind, you can unsubscribe at any time.