Boring Money’s mid-risk investment test accounts reveal huge disparity in how your money is managed

Experiment from independent savings and investment advice website BoringMoney.co.uk reveals what has happened to their £500 investments exactly 1 year on.

In the first week of January 2018, BoringMoney.co.uk invested £500 in the medium risk portfolio offered on more than 20 different platforms and robos. A year later in 2019, the Boring Money research team looked at what happened to the £500 invested.

Boring Money conducted this test in response to consumer research and feedback that investors want to be able to compare performance net of all charges, reported as a £ outcome.

  • Falling markets meant that all portfolios were down but – after charges – the balances ranged from £361 to £481. This is a net fall of 4% - 28%.
  • For perspective, not including any charges, the FTSE 100 fell by 12.75% over the same timeframe.
  • The best performers over the 12-month period were Wealthsimple, Wealthify then IG Smart Portfolios which had £481.21, £480.73 and £476.85 left in the account respectively.
  • Excluding providers with fixed or minimum charges, the worst performers over the 12-month period after fees were Hargreaves Lansdown, Charles Stanley Direct and Moneyfarm which left clients with £454.81, £462.26 and £462.40 in their accounts.
  • These all-in-one fund solutions are increasingly important on DIY investing services. Own brand funds and portfolios account for circa 7% of all third-party fund platform assets.  

Figure 1: Value of £500 test investment as at 4th January 2019, net of all charges

Boring Money CEO Holly Mackay comments,

This is the best way of talking about performance to customers that we can think of. The endless and complex industry debate around performance attribution and methodologies can be put to one side – all I care about as a customer is what is the £ balance left in my account at the end of my investing timeframe?

Figure 2: Admin charges and changes in asset allocation

This is a story of tactical asset allocation, or short-term adjustments to where the money is invested, as well as the impact of charges.

The top three performers over the year reduced their exposure to equities by 15% - 17%. Others in the bottom half of the table increased the equity allocations by 15% - 25%.

Mackay comments,

Conducting what should be a simple analysis confirmed that competition is not working well enough in this market. I needed to have over 20 test accounts, take a day to trawl through the data and to have 20 years’ experience of looking at platform charging models to produce these findings on a comparable basis.  We know that customers want to see performance net of charges, and they also understand £s better than %s. As the market for investment solutions grows, consistency and simplicity in reporting methodologies are required.

Boring Money also observes the huge disparity in what investors who selected a mid-range portfolio just 12 months ago have ended up with today. Twelve months ago, equity allocations ranged from 50% to 75%. Today these same portfolios range from 43% to 88%.

To find out more about who did best with £500? Read Boring Money’s guide to the best online investment platforms and robo advisors revealed

ENDS

 

Notes to Editors:

  1. Where an in-house fund or portfolio was available, Boring Money selected the option with an equity allocation nearest to 60%. Where no such product was available, the Vanguard LifeStrategy 60 fund was bought.
  2. 12 months is not a long enough timeframe to determine investment skill. As such the focus of these findings is intended to be about the impact of charges, the difficulties in comparison and the significant differences in what lies under the bonnet of ostensibly similar solutions.
  3. All figures are reported net of charges including any dealing fees and minimum monthly fees.
  4. Where the administration fees are taken from a separate cash account, Boring Money deducted these costs from the final investment figure.
  5. Those platforms with a flat fee cost structure are greyed out as the impact of these on a £500 account is material – they would of course be more competitive with higher test balances.
  6. Barclays has a minimum monthly charge of £4 per month, and Fidelity charges an annual fee of £45 for customers with less than £7,500 invested and without a regular savings plan.
  7. All accounts were opened and investment orders placed on 2nd January 2018 – different settlement and funding procedures meant the actual purchases were made at various times over the following week.
  8. All 2019 balances are correct as at 4th January 2019.
  9. No admin & dealing fees were paid to AJ Bell Youinvest as no dealing fees apply on AJ Bell funds and there was a promotion for custody fees until 1 January 2019.
  10. The January 2018 equity allocation for the Santander Investment Hub test account would have likely been between 55%-65%.

 

The specific investment products bought and held in the Boring Money test accounts are:

 

Provider Fund/portfolio

AJ Bell Youinvest

VT AJ Bell Passive Adventurous

Alliance Trust Savings

Vanguard LifeStrategy 60%

Aviva

Aviva Investors Multi-asset Fund II

Barclays Smart Investor

Barclays Wealth Global Markets 3

Bestinvest

IFSL Tilney Growth

Charles Stanley Direct

MI Charles Stanley Multi Asset 3 Moderate

Evestor

Evestor Portfolio 2

Fidelity

Fidelity Multi Asset Allocator Growth

Hargreaves Lansdown

HL Balanced Growth

IG Smart Portfolios

IG Growth portfolio

Interactive Investor

Vanguard LifeStrategy 60%

MoneyFarm

Moneyfarm Aggressive Portfolio

Moola

Moola Adventurous Portfolio

Nutmeg

Nutmeg Portfolio 5

Santander Investment Hub

Santander Multi Index 3

Standard Life (Self investor)

MyFolio Managed IV

The Share Centre

TC Share Centre Multi Manager Balanced

True Potential Investor

True Potential Balanced Portfolio

Vanguard

Vanguard LifeStrategy 60%

Wealthify

Wealthify Ambitious Portfolio

Wealthsimple

Wealthsimple Balanced Portfolio

 

For media enquires please contact:

Vicky Taylor, Koozai

vicky.taylor@koozai.com

07446650521

 

About Boring Money:

(www.boringmoney.co.uk) BoringMoney.co.uk is a free, independent financial advice website which helps normal people who don't have PhDs in finance make some smart investment decisions (without being bored to tears on the way). Founder, financial expert and commentator on investment markets Holly Mackay passionately believes that investments shouldn’t just be for “The Old Boys.” Explaining investments without the jargon, Boring Money aims to help everyone who has ever felt a bit alienated, patronised or simply cross-eyed and exhausted, to make some good decisions quickly and painlessly. Boring Money is not regulated to give personal financial advice, nor is it regulated by the industry watchdog.

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