What portfolios did we look at?

For each robo-adviser we looked at three different porfolios, a “low-risk”, “medium-risk”, and “high-risk” portfolio. The three tabs on this page will walk you through the performance of these main players over the last 1 and 2 years. 

• Low-risk portfolios are like souped-up cash. Cash like but with a few riskier assets in the mix, mainly bonds. Basically, the least risky option.
  
  
• Medium-risk portfolios are roughly half shares and half cash/bonds. Not the riskiest, but has a bit of a kick.
  
  
• High-risk portfolios are in around 100% shares. This is like investing in the top 100 UK shares.
  
  

As a final note, don't be afraid of risk. In day-to-day life we often equate risk with behaving like a bit of a prat. It's cavalier. Irresponsible. 

In investing terms, risk is normally equated with volatility. For some people and some situations, taking a high-risk approach will actually be the most sensible option. For example, if you're saving for 10 years plus. If you're 30 and this is a pension account. If you're still in nappies and this is a Junior ISA you wont see till you're 18. (By the way if you're in nappies and reading this, you have a bright future ahead!).

Do read up on this. There are risks with investing and nothing is guaranteed. But do be aware that many of us, and women in particular, actually don't always take enough investment 'risk'. 

Low risk portfolios

The charts below show what would have happened if you had invested £5,000 up to the 30^th September 2018.

All of the nine robo-advisers have at least a 1-year track record, and seven have at least a 2-year track record. (This just means they have been operating for that long, and so we can look at what they've achieved and see how well we think they have done.) 

The 1 year performance looks at what would have happened if you invested from 1^st October 2017 to 30^th September 2018. The 2 year performance looks at 1^st October 2016 to 30^th September 2018.

How did they do?

“Low-risk” portfolio returns on £5,000 invested up to the 30th September 2018

What is in these portfolios

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. 

Robo-adviser “low risk” portfolio asset allocations over the 12 months to 30^th September 2018

What's the most I could have lost?

Most of these portfolios increased in value over the 2 years, but some have fallen in value. In both scenarios there were some ups and downs along the way. If 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, then the most you would have lost in one of these ‘low risk’ portfolios over 1-year would have been £107. Over 2 years this would have been £101.

Medium risk portfolios 

The charts below show what would have happened if you had invested £5,000 up to the 30^th September 2018.

All of 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 1^st October 2017 to 30^th September 2018. The 2 year performance looks at 1^st October 2016 to 30^th September 2018.

How did they do?

 “Medium-risk” portfolio returns on £5,000 invested up to the 30th September 2018

What is in these portfolios

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.

Robo-adviser “medium risk” portfolio asset allocations over the 12 months to 30^th September 2018

What's the most I could have lost?

All of these portfolios increased in value over the year. However, there were some ups and downs along the way. If 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, then the most you would have lost in one of these ‘medium’ portfolios would be £216.

High risk portfolios

The charts below show what would have happened if you had invested £5,000 up to the 30^th September 2018.

All of 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 1^st October 2017 to 30^th September 2018. The 2 year performance looks at 1^st October 2016 to 30^th September 2018.

How did they do?

“High-risk” portfolio returns on £5,000 invested up to the 30th September 2018

What is in these portfolios?

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. 

Robo-adviser “high risk” portfolio asset allocations over the 12 months to 30^th September 2018

What's the most I could have lost?

 All of these portfolios increased in value over the year. However, there were some ups and downs along the way. If 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, then the most you would have lost in one of these ‘spicy’ portfolios would be £283. 

The small print

We have tried to keep this guide to robo returns 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.

If you're really feeling like getting down and dirty, our industry guide gets totally geeky and we talk Sharpe Ratios, maximum drawdowns and other fun things. 

1. Cash is pretty easy to assess and compare. What’s the rate. Is it with a credible provider? Job done. Investments are a bit trickier. Simply picking the group with the highest returns takes no account of how they have achieved those returns. Let’s give a really extreme example. Say we set up a scheme and invested 100% in a new tech firm which made cloud stuff which no-one understood. And that stock doubled. If you bought on returns alone you would think we were very smart. If you looked at the stratospheric risk we had taken with your money – if that one firm had gone belly-up you’d have lost everything – you wouldn’t go near us. Investing is a game of balancing risk with returns.
   
   It's worth observing that over 2 years, all of the robos whose higher risk portfolios we analyse had lesser monthly drawdowns than the FTSE100 (which is a bit of a Mathmo way of saying that they offered a smoother journey) and also outperformed this one index, which we know lots of investors use as an easy sense-check on how we're doing. 

2. So how to look at risk. Each of these groups takes on different levels of risk to get their returns. As most of these robo advisers are relatively new, we only have data for a couple of years for most. So it’s still a bit early to draw robust conclusions. We can tell you the most that you would have lost in any one year which we hope helps to quantify the risk involved. As track records increase we can get more specific.

3. When investment bods talk about risk, they’re not talking about the risk of losing it all. They are talking about the volatility of your investment. About how much the value jumps around and up and down. A risky asset, or a high risk portfolio, could jump from £100 to £70 to £120 over the course of a year (just as an example). So the risk is volatility, not the risk that you could lose it all. A massive benefit of robo advisers is that they spread your money around loads of different investments and regions so you’re putting your investment eggs in loads of different baskets. No-one can guarantee things won’t head south but the chances of losing it all are absolutely minute.

4. Costs. Unlike with most savings accounts, you do pay a fee for having your money invested. This is not often as simple to calculate as it should be. You will pay the robo adviser a fee for administration and their calculations/number-crunching. And you’ll also pay a fee for the investments they buy on your behalf. Around 1% a year is pretty decent value for a managed passive portfolio.