Methodology - Robo adviser performance report Q3 2018

  • Analysis is based on monthly portfolio returns data from 9 robo advisers up to the 30th September 2018 – this includes, Evestor, IG, Netwealth, Nutmeg, Moneyfarm, Scalable Capital, True Potential Investor, Wealthify and Wealthsimple.
  • All figures are inclusive of fees, performance data includes the underlying investment charges and robo-adviser fees.
  • Low-risk’ portfolios are most like cash.
  • ‘Medium risk’ portfolios most closely map holding a 50:50 split between cash and the FTSE 100.
  • ‘High risk’ portfolios are those which most closely map to the FTSE 100.
  • For the FTSE 100 we used a total return index and deducted charges of 0.31% – equivalent to a passive investment management fee of 0.06% and a platform fee of 0.25%.
  • For the 50% FTSE 100 we used £2,500 invested in the FTSE 100 as per the point above, and £2,500 saved in a cash ISA.
  • For the Leading Cash ISA, we used the monthly interest accrued on the leading online easy access Cash ISA available during each month
  • The figures for maximum drawdown are based on the worst outcome that an investor would have experienced by investing at a peak and then withdrawing their money at a subsequent trough. Monthly returns data were used, so investors may have experienced a greater loss within a month.
  • In the low risk portfolios, we have used the most comparable unconstrained portfolios for Nutmeg and Netwealth.
  • The risk-adjusted return used is the Sharpe ratio, developed by Nobel laureate William Sharpe. It is the most widely used measure for calculating the risk-adjusted return and measures the return achieved for every unit of risk.
  • In calculating the Sharpe ratio we used the 3-month GBP LIBOR as the risk-free rate.

 

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