Diversified returns outperformed FTSE 100 across 2017

Investors at the more aggressive end of the robo-advice market outperformed the FTSE 100 in 2017, according to the latest research from consumer advice site, Boring Money.

  • In the UK robo adviser assets have grown from £1.6bn in September 2017 to an estimated £1.8bn at the end of 2017
  • Returns show that on average the robos diversified portfolios of equities outperformed the FTSE 100 in 2017 and did so at a lower risk
  • The top performing robo portfolios analysed were Scalable Capital’s 25% (which returned 19.27%), Nutmeg’s Portfolio 10 (which returned 13.41%), followed by evestor’s Portfolio 3 (which returned 12.72%)

The robo-advice sector continues to help diversify risk for retail and novice investors, allowing them to invest in stocks and shares related products without having to be ‘experts’ in the market.

Boring Money has analysed robo adviser returns across 2017 from 7 of the major players in the evolving UK market; Nutmeg, Scalable Capital, Moneyfarm, True Potential, Wealthify, and IG’s Smart Portfolios.

RETURNS

 

  • The average ‘Mild’ portfolio returned 2.1% across 2017 (we categorise ‘Mild’ portfolios as low-risk portfolios. Cash-like, but with a few riskier assets in the mix).
  • The average ‘Medium risk’ robo adviser portfolio returned 6.9% across 2017 (‘Medium’ portfolios most closely map holding a 50:50 split between cash and the FTSE 100).
  • The average ‘Spicy’ robo adviser portfolio returned 12.7% across 2017 (‘Spicy’ portfolios are those which most closely map to the FTSE 100).

 

From an initial £5,000 investment at the start of 2017, the average ‘spicy’ portfolio returned £633. This outperformed the FTSE 100 which returned a lower amount of £597 over the same period, in conjunction with more volatility.

RISK

In a worst-case scenario, if someone had invested at the top and sold at the bottom, on average across the seven spicy portfolios they would have lost £70 compared to a £122 ‘maximum drawdown’ from the FTSE 100.

Holly Mackay, CEO of Boring Money comments, “One of the main benefits of a Robo adviser is to serve up a diversified dish of investments to less-confident investors who might otherwise show a home bias and have a smaller collection of largely British shares. At the same time risk is mitigated and volatility smoothed – on average those customers investing in a robo would have seen less volatility than those simply tracking the FTSE 100.”

ENDS

 

 

 

 

 

Notes to the Editors:

  • All figures are inclusive of fees, performance data includes the underlying investment charges and robo-adviser fees. 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%.

  • 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.

  • The ‘Mild’ portfolios are the lowest risk portfolios. For Nutmeg and Netwealth we have used their most comparable unconstrained portfolios.

  • Based on initial investments of £5,000, the 12-month results for the portfolios were:

ROBO RETURNS 2017 

 

Mild

 

 

 

Medium

 

 

 

Spicy

 

 

evestor Portfolio 1

£5,234

4.68%

 

evestor Portfolio 2

£5,459

9.18%

 

evestor Portfolio 3

£5,636

12.72%

Netwealth Risk Level 2

£5,153

3.07%

 

Netwealth Risk Level 4

£5,368

7.36%

 

Netwealth Risk Level 7

£5,606

12.12%

Nutmeg Portfolio 2

£5,120

2.40%

 

Nutmeg Portfolio 5

£5,350

7.00%

 

Nutmeg Portfolio 10

£5,670

13.41%

MoneyFarm Portfolio 1

£5,029

0.58%

 

MoneyFarm Portfolio 4

£5,297

5.95%

 

MoneyFarm Portfolio 6

£5,478

9.57%

Wealthify Cautious

£5,111

2.22%

 

Wealthify Ambitious

£5,327

6.55%

 

Wealthify Adventurous

£5,413

8.25%

Scalable Capital 5%

£5,053

1.07%

 

Scalable Capital 13%

£5,201

4.03%

 

Scalable Capital 25%

£5,963

19.27%

 

 

 

MAXIMUM DRAWDOWNS 2017

 

Mild

Maximum Drawdown

 

Medium

Maximum Drawdown

 

Spicy

Maximum Drawdown

evestor Portfolio 1

£60

 

evestor Portfolio 2

£81

 

evestor Portfolio 3

£96

Netwealth Risk Level 2

£33

 

Netwealth Risk Level 4

£45

 

Netwealth Risk Level 7

£56

Nutmeg Portfolio 2

£22

 

Nutmeg Portfolio 5

£41

 

Nutmeg Portfolio 10

£44

MoneyFarm Portfolio 1

£22

 

MoneyFarm Portfolio 4

£86

 

MoneyFarm Portfolio 6

£67

Wealthify Cautious

£42

 

Wealthify Ambitious

£60

 

Wealthify Adventurous

£74

Scalable Capital 5%

£74

 

Scalable Capital 13%

£163

 

Scalable Capital 25%

£109

UK Shares (FTSE 100)

£122

 

UK Shares (FTSE 100)

£122

 

UK Shares (FTSE 100)

£122