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Diary of a digital investor: how robos fared during volatility

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Diary of a digital investor: how robos fared during volatility

Five online wealth managers are pitted against each other as Selin Bucak invests money and compares their services. Nutmeg, Moola, Wealthify, Moneyfarm and newcomer Wealthsimple have all put her in different risk buckets, from cautious to adventurous. Here, she chronicles her experiences.

Every time I sit down to write one of these updates, I discover something new about each of my robo-advisers.

After the recent bout of volatility, it was a relief to find out that I did not suddenly lose all of my money, but the exercise brought me one step closer to figuring out which of my providers I would be comfortable recommending to my friends – if I was ever asked to do such a thing.

It is difficult to assess any portfolio based on a few days, so this is not meant to act as a judgement, but rather a curious exploration.

It seems that there was a common thread during the volatility: ‘keep calm and carry on’ was the cliché of the day from all my robo advisers.

However, one stood out: Nutmeg. In its market update, it provided me with details on what the moves mean for my portfolio and the changes that they actually made. Nice touch!

In terms of performance, there was variety, but what caught my eye is how the companies actually present the performance.

First off there is Moola, once again disappointing me. Nowhere on the dashboard can I see the performance of my portfolio as a percentage. It does give me the investment value, and there is a nice little interactive graph that shows me the increase penny by penny, but no percentage.

The two portfolios that showed the greatest difference between them in terms of performance, were also the two that impressed me the most in terms of the presentation: Moneyfarm and Wealthsimple.

Here is a breakdown of what I discovered about each of my robo-advisers and how they have performed since I started investing.

Nutmeg

My Nutmeg portfolio has been a good performer since I started investing on 1 June 2017, with my investments going up 1.68% over the period to 12 March. During the period of volatility, like all my other portfolios, it took a hit. The value of my portfolio went down from £1,344 to £1,280, a drop of 4.8% between 1 and 11 February. Soon after it started recovering and was up to £1,305 on 5 March, a day before my monthly contribution of £100 went in.

Nutmeg chief investment officer Shaun Port provided an update to clients: ‘With difficult market conditions, a portfolio of half UK government bonds and half UK equities would have seen a loss of around 3.5%, Nutmeg’s lower and medium risk portfolios lost between 1% and 2% during the month of February, and higher risk portfolios lost around 2.5% during the month.

‘In February, we made some changes to our US equity holdings: in our medium risk portfolios we moved to a broad US equity fund with a currency “hedge”, removing the US dollar currency risk. In our higher risk portfolios, we increased exposures to financial and technology stocks – where we believe we’re going to see the most growth in the US equity market.’

Nutmeg is the only provider that actually gave me an insight into the changes that were made to the portfolios, which I appreciate as a client who follows the markets closely. 

  All time performance (since 30 May) All time contributions Investment style/risk
  1.69% or £24 £1,400 6/10

Moneyfarm

Moneyfarm, the riskiest bucket compared to the rest of my investments, has been the best performer to date. It is also the one that had the wildest swing during the recent period of volatility. On 29 January, the value of my portfolio was at a high of up 6.78% and by 11 February, it was down -2.81%. Since then it has been clawing back the losses and is now up 3.06%.

Moneyfarm is one of only two robo advisers I am invested in that reveals the performance of my individual holdings.

During the period of volatility, Moneyfarm had a clear message: avoid knee-jerk reactions.

CIO Richard Flax commented: ‘Volatility might have returned, but the underlying economic environment still looks strong, inflation is relatively low, and although central banks will tighten monetary policy, they will do so at a gradual pace – keeping a keen eye on maintaining the global economic recovery. Moneyfarm expects this to be reflected in asset prices.’ 

  All time performance (since 8 June) All time contributions Investment style/risk
  3.07% or £20.74 £1,150 Adventurous

Performance of individual holdings to 12 March:

  • Db x-trackers Global Sovereign Bonds Sterling hedged: -0.57%
  • iShares GBP Corporate Bond 0-5 years Ucits ETF: -0.63%
  • SPDR Barclays Emerging Markets Local Bond Ucits ETF: -2.29%
  • iShares Global High Yield Corp Bond Ucits ETF: -3.55%
  • iShares MSCI World GBP Hedged Ucits ETF: 4.89%
  • SPDR S&P Global Dividend Aristocrats Ucits ETF: -3.99%
  • Vanguard FTSE All World Ucits ETF: 2.25%
  • iShares Core MSCI Emerging Markets IMI Ucits ETF: 5.29%

Moola

After scouring all the pages on the dashboard, not finding a percentage figure for the growth of my portfolio was frustrating. While it is nice that I can see the individual funds that I’m invested in, I do not have a geographical or asset class breakdown. This, investors will have to work out for themselves and I doubt many will have the time or the inclination to do so.

Looking past these failings, I can see that my portfolio has done well for a conservative risk profile. However, during the recent volatility, like the others, it also saw a fall in value. On 31 January, it was £1,014.29, going down to £986.69 on 11 February, a decrease of 2.7%. It started recovering, although not completely, reaching £1,003.63 on 28 February, a day before I added my regular £100.

Chief investment officer Simon Moore wrote: ‘The early days of February saw the markets dip, but return to growth in subsequent weeks. These sort of dips are a normal part of investing.

‘Avoiding reliance on growth from any single country is one reason that Moola portfolios are internationally diversified. This means that exposure to the British economy is reduced relative to only holding shares in the country where you live.’ 

  All time performance (since 8 June) All time contributions Investment style/risk
  £3.61 £1,100 Conservative

Wealthsimple

Wealthsimple is the only other company that provides the performance breakdown for individual holdings in my portfolio, helping me understand what is happening at the underlying level and see exactly which investments are contributors and which are detractors.

I invested in Wealthsimple a lot later than the other four, so a direct comparison is unfortunately not possible. This is the only portfolio so far that has had bad performance and what happens over the rest of the year remains to be seen. Between 31 January and 11 February, the portfolio’s value decreased from £649.53 to £624.89, a 3.8% drop.

However, head of portfolio management George Rooke was quick to point out: ‘Stock markets go down, just as they also go up. It should surprise no one, and smart investors should expect some bumps in the road.

  All time performance (since 19 October) All time contributions Investment style/risk
  -2.3% £750 Growth

Performance of individual holdings to 12 March:

  • iShares UK Equity index fund UK: -2.4%
  • iShares Corporate Bond index fund: -1.4%
  • Vanguard US Equity index fund: 1%
  • Amundi Index MSCI North American: 2.9%
  • iShares UK Gilts All Stocks index UK: -0.7%
  • Vanguard Global Small-Cap index fund: -2.9%
  • iShares Continental European Equity index fund: -1.9%
  • Vanguard Emerging Markets Stock index fund: -1.8%
  • Legal & General Emerging Markets Government Bond USD index fund: -5.8%
  • Pimco Global High Yield Bond fund: -1.3%
  • iShares Japan Equity index fund: -2.5%
  • iShares Pacific ex Japan Equity index UK: -0.1%

Wealthify

My Wealthify Confident portfolio, which sits in the ARC Balanced bucket, is up just under 1% over the nine months since I invested. On 29 January, the value of my portfolio was £1,017, which went down to £983.08 on 11 February, a drop of 3.3%. Following this slight dip, it started recovering and rose to £1,001 on 26 February, before my £100 contribution.

Regarding the volatility, Michelle Pearce, CIO, wrote: ‘February was a difficult month. Most investment types ended the month lower with only commodities bucking the trend. Commodities +2.12%, private equity -2.32%, bond investments -0.21%, property -4.67% and shares -1.73%.

‘February was a tough month for most investors everywhere. However, thanks to some decisions made by our investment team at the start of February, we ended the month better than we would have, had we done nothing. These market dips are part and parcel of investing and a reminder that you should always think long-term and ignore the short-term noise.’ 

  All time performance (since 30 May) All time contributions Investment style/risk
  0.93% or £1.36 £1,100 Confident

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