On July 1, 2017, we made a hypothetical investment of $1m in each of the three robo-advisors featured below. The results in today’s article show what that $1m is now worth. Return results will be published monthly until August 2018.
Three portfolios for each robo-advisors are presented – cautious, balanced and aggressive.
The purpose is to highlight the practical angle – how robo-advisors allocate and how they perform over the long-term, particularly when there is a downturn.
Note that the robo-advisors operate in different markets and offer different products. In FSA‘s presentation, they are not competing against each other, but against their own benchmarks.
FSA Robo-Advisor Showcase
Performance on 1 September 2017
| July 2017 | August 2017 | |
| Conservative portfolio | 1.54% | -1.37% |
| Benchmark (50%/50%) | 1.16% | 0.41% |
| Balanced portfolio | 1.69% | -1.98% |
| Benchmark (70%/30%) | 1.47% | 0.27% |
| Aggressive portfolio | 1.83% | -2.58% |
| Benchmark (90%/30%) | 1.78% | 0.13% |
Benchmark: S&P 500 / S&P US Aggregate Bond Index
This month FSA welcomes Algebra, a robo-advisor offered by Singapore-based Farringdon Group, to its monthly performance feature.
Algebra was launched in July 2017. It offers sharia-compliant and conventional portfolios. FSA features non-sharia portfolios.
The basis of Algebra’s portfolios is Farringdon’s Large Cap Master Select Gold Portfolio. It consists of 50 US stocks from the S&P 500 universe. The algorithm analyses portfolios of ten highly-rated active US equity fund managers and selects five stocks from each manager’s portfolio that it deems the manager’s favourites. The three portfolios contain a different allocation of fixed income to manage the risk profile. The annual fee is 0.85%.
| July 2017 | August 2017 | |
| Conservative portfolio | 0.73% | 0.84% |
| Benchmark | 0.93% | 0.69% |
| Balanced portfolio | 1.16% | 0.73% |
| Benchmark | 1.70% | 0.50% |
| Aggressive portfolio | 1.80% | 0.73% |
| Benchmark | 2.39% | 0.28% |
Benchmark: Morningstar Conservative/Moderate/Aggressive Target Risk Indices
Beijing-based Creditease Wealth Management launched Toumi RA, its robo-advisory platform in May 2016. It is currently offered to investors in mainland China. It offers offshore US dollar-denominated portfolios of global ETFs, holding equity and bond ETFs as well as gold and real estate. It has nine levels of risk for investors to choose from. FSA features three portfolios with the risk levels: 2 – second lowest, 5 – moderate and 8 – second highest. Creditease does not charge fees.
| July 2017 | August 2017 | |
| Conservative portfolio | 1.13% | 0.70% |
| Benchmark | 0.93% | 0.69% |
| Balanced portfolio | 1.58% | 0.39% |
| Benchmark | 1.70% | 0.50% |
| Aggressive portfolio | 1.86% | 0.13% |
| Benchmark | 2.39% | 0.28% |
Benchmark: Morningstar Conservative/Moderate/Aggressive Target Risk Indices
In business since 2008, Marketriders is offered by the US-based brokerage Sogotrade. It was re-launched in March 2017 as a full service robo-advisory service targeting US and Asian clients. Sogotrade has offices in China, Hong Kong and Taiwan. Marketriders currently has about $1.2bn of AUM. It offers US-based accounts, and its model portfolios consist of US-based ETFs. Marketriders charges the advisory management fee of 0.265% per year and no transaction fees.
