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-advisor 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 November 2017
| Monthly Return | Jul 2017 | Aug 2017 | Sep 2017 | Oct 2017 |
| Conservative portfolio | 1.54% | -1.37% | 1.68% | 2.93% |
| Benchmark (50%/50%) | 1.16% | 0.41% | 0.78% | 1.10% |
| Balanced portfolio | 1.69% | -1.98% | 2.58% | 4.09% |
| Benchmark (70%/30%) | 1.47% | 0.27% | 1.24% | 1.55% |
| Aggressive portfolio | 1.83% | -2.58% | 3.48% | 5.23% |
| Benchmark (90%/10%) | 1.78% | 0.13% | 1.70% | 2.00% |
Benchmark: S&P 500 / S&P US Aggregate Bond Index
Algebra is a robo-advisor offered by Malaysia-based Farringdon Group. It was launched in July 2017. It offers sharia-compliant and conventional portfolios. FSA features non-sharia portfolios.
The basis of Algebra’s portfolios is the Large Cap Master Select Gold Strategy, developed by Singapore-based Farringdon Asset Management. The portfolio consists of around 50 US stocks from the S&P 500 universe. They are selected based on analysis of portfolios of ten highly-rated active US equity fund managers and choosing five stocks from each manager’s portfolio in which they are overweight. The three model portfolios presented here contain a different allocation of fixed income to manage the risk profile. The annual fee is 0.85%.
“The reason that we did so well this month is that we are very heavy in tech stocks at the moment,” commented Martin Young, CEO of Farringdon Asset Management. He highlighted holdings in Adobe Systems, Nvidia, Netflix and Microsoft, among others, as contributing to the base portfolio’s outperformance in October.
| Monthly Return | Jul 2017 | Aug 2017 | Sep 2017 | Oct 2017 |
| Conservative portfolio | 0.73% | 0.84% | 0.07% | 1.12% |
| Benchmark | 0.93% | 0.69% | 0.13% | 0.43% |
| Balanced portfolio | 1.16% | 0.73% | 0.52% | 1.47% |
| Benchmark | 1.70% | 0.50% | 1.16% | 1.24% |
| Aggressive portfolio | 1.80% | 0.73% | -0.38% | 2.07% |
| Benchmark | 2.39% | 0.28% | 2.12% | 1.93% |
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.
| Monthly Return | Jul 2017 | Aug 2017 | Sep 2017 | Oct 2017 |
| Conservative portfolio | 1.13% | 0.70% | 0.60% | 0.55% |
| Benchmark | 0.93% | 0.69% | 0.13% | 0.43% |
| Balanced portfolio | 1.58% | 0.39% | 1.56% | 0.80% |
| Benchmark | 1.70% | 0.50% | 1.16% | 1.24% |
| Aggressive portfolio | 1.86% | 0.13% | 2.30% | 1.41% |
| Benchmark | 2.39% | 0.28% | 2.12% | 1.93% |
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.
