Four online wealth managers are pitted against each other as Selin Bucak invests money and compares their services. Nutmeg, Moola, Wealthify and Moneyfarm have all put her in different risk buckets, from cautious to adventurous. Here, she chronicles her experiences.
I must admit I was a little surprised when I looked over the Moola website before sitting down to write this latest instalment. From Gemma Godfrey, the ex-head of investment strategy at Brooks Macdonald, former chairman of the investment committee at Credo Capital and a former fund manager at GAM, I would have expected to find a lot more investment content.
However, there really isn’t anything aside from the videos explaining things like what a bond or a share is and how to choose the right investment. This leads me to believe that Godfrey is mainly targeting first time savers and investors.
I’m getting a regular newsletter from Moneyfarm, updates from Nutmeg and comments, such as on the hung parliament following the UK election, from Wealthify. During this time I have not received anything from Moola. And aside from the initial report explaining, in a very generalised manner, why the asset allocation decisions were made.
In my profile, it is indicated that I ‘demonstrated a conservative attitude about possible losses versus possible gains’. My aversion to loss is benchmarked against a regular survey of the UK population, apparently.
Here is the crux of the information I received about why my portfolio was built in the way it was: ‘Over your proposed five year investment time horizon, history gives us high confidence that diversified global stocks are likely to deliver a robust return, so thousands of global companies are represented in your portfolio.
‘However, the stock market can be relatively volatile, and so we believe having fixed income assets, such as bonds issued by the British government, can help smooth returns and still potentially provide income.
‘We also included real assets in your portfolio, which are helpful if inflation rises unexpectedly.’
Of course, not everyone who invests with Moola will have the same preferences, but I would have liked to get more information and more insight into the team’s views.
What do they think about Brexit, the election, or even the FCA’s asset management study? Having access to blogs, analysis and investment views in the other three robo-advisers made me feel like I at least know the people I’m handing my money over to.
Even with Godfrey’s high profile, the lack of information is chipping away at my confidence in the service.
Frank Talbot, head of investment research at Citywire, comments:
The first thing that is apparent is the tie up with iShares. As Europe’s dominant passive provider this is perhaps unsurprising and must have enabled Moola to bring costs down (It was revealed in December 2016 that Moola would partner with BlackRock). In terms of performance, iShares is, on the whole, competitive. It may not be the best in every category, but across the board it is generally no worse or better than other providers and it has the breadth.
The portfolio is more defensive than Nutmeg’s, with more than two thirds of the investments in the UK and 90% in sterling or sterling hedged assets, plus over two thirds in fixed income. Given Selin’s young age (27), this strategy appears to be overly cautious and is reflective of the fact that it was an algorithm and not an individual determining her risk profile.
This is consistent across all of the providers, outside of Nutmeg, which has put her in a bucket that isn’t really in keeping with her long-term investment horizons. I dare say this was as a result of her not being prepared to lose much money along the way.
UK bonds: 65.29%
Global bonds: 1.97%
EM bonds: 1.98%
US equities: 11.94%
European equities: 5.91%
UK equities: 3.92%
Japanese equities: 2.01%
Asian equities: 2.02%