Nutmeg delivers highest robo returns to Q2 18
Independent financial advice site BoringMoney.co.uk shares new insight, analysing data from eight of the UK’s leading robo advisers (as at 30 June 2018); assessing their level of risk and performance over the last 12 months.
- The top performing robo portfolios analysed were Nutmeg’s Portfolio 10 (7.92%), IG’S 5 Aggressive (7.46%) and True Potential Investor’s Aggressive Portfolios (7.24%)
- Investment in the FTSE 100 would have reaped higher rewards at a return of 8.4%, however, this would have come with much higher volatility and price swings
- On average, higher risk portfolios returned 6.38% in the 12 months leading to 30th June 2018
- While the FTSE 100 would have provided better returns than any robo it also showed the most volatility, with a maximum drawdown of 7.28% vs just 4.77% on average for the high risk robo portfolios.
Year-on-year returns to Q2 2018
- The highest low-risk portfolio analysed returned 2.49%, with the lowest returning -0.41%.
- The highest medium-risk portfolio analysed returned 5.27%, with the lowest returning 1.88%.
- The highest high-risk portfolio analysed returned 7.92%, with the lowest returning 4.15%.
(By way of comparison, a leading easy access cash ISA paid 1.17% for the period.)
Risk vs. return
Boring Money also looked at ‘maximum drawdowns’ to indicate how volatile the journey has been. Over the 12-month period, anyone who invested £5,000 in one of the eight higher risk robo portfolios would have suffered a potential maximum loss of between £217 to £283. This is compared to a maximum of £364 in the more volatile FTSE 100.
Holly Mackay, CEO of Boring Money, comments,
A less discussed benefit of robo advice is how it can significantly reduce the risk that investors are taking by delivering good diversification. This can be seen most strongly if we look at the first three months of 2018. The FTSE 100 had a wobbly start to the year and fell by over 7% in the 3 months to March 2018. The higher risk robo portfolios performed significantly better than this index over this timeframe. With short track records to date, I find these risk metrics as important as the returns.
To help consumers further understand the current robo advisor landscape, Boring Money has created a more consumer-friendly version of the report on robo advisor performance 2018 (www.boringmoney.co.uk/learn/learning-paths/easy-peasy-investing/)
Notes to Editors:
- Boring Money analysed robo adviser returns between 01 July 2017 – 30 June 2018 from eight of the major players; evestor, IG, Netwealth, Nutmeg, Moneyfarm, Scalable Capital, True Potential Investor and Wealthify. Collectively they represent over 75% of UK robo-adviser assets.
- Track records are still limited, with only Nutmeg having a three-year track record.
- ‘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.
- 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 FTSE 100 would have returned 8.78% before fees.
- 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.
Robo returns on £5,000 invested 01 July 2017 – 30 June 2018
Maximum drawdowns on £5,000 invested 01 July 2017 – 30 June 2018
For media enquires please contact:
Cara Whitehouse, Boring Money
Vicky Taylor, Koozai
About Boring Money:
www.boringmoney.co.uk is an independent research and content business which provides information, tips and Best Buys to consumers. The business conducts regular research with industry providers and consumers and looks at the developing DIY investment market from both the customer and provider perspective. Boring Money holds test accounts with over 25 providers and also holds regular focus groups and interviews with consumers to ensure regular input and feedback from the user perspective.
Founder Holly Mackay has worked in the investment industry for 19 years and is supported by a team of 10 researchers, analysts and marketing execs. www.boringmoney.co.uk is not regulated to give personal financial advice, nor is it regulated by the industry watchdog.