The number of robo-advisors has grown continuously in recent years. Almost 40 are now vying for the favor of investors in this country. They are aimed at people who do not want to fully take care of their own investments, but are looking for support in the form of automated asset management.
Investors are assessed on the basis of a questionnaire and the capital is then put into a mix of ETFs or actively managed investment products. Which investment strategy is the right one depends on the answers given. Roughly speaking, savers are divided into different risk groups.
The online portal Brokervergleich.de has analyzed 20 robo-advisors and assessed their performance during the recent slump in the stock markets. In a test with real money deposits, 20 strategies were compared which, according to Brokervergleich.de, are aimed at investors with a balanced risk profile.
The balance for the period of the greatest decline on the stock exchanges from February 20 to March 16 is mixed. The performance of the observed portfolios ranges from -12.1 percent to -27.6 percent. The deposits at Cominvest, Kapilendo and WMD Capital performed particularly well. The deposits at Scalable Capital, Ginmon and Robin developed weakly (see table below).
The portal not only compares the providers with each other, but also in relation to a benchmark. A 50/50 mix of shares and fixed income securities is used. A benchmark index is used, half of which is made up of the MSCI World and the Barclays Aggregate Bond.
Eleven of the 20 custody accounts examined outperformed the benchmark during the market downturn. Nine were left behind. Overall, the robo-advisors worked satisfactorily.
Even if the Brokervergleich.de test was carried out with real money, it has one weakness: the custody accounts compared are not always congruent in terms of objectives and investor profile. For example, the scalable capital account examined does not count among the balanced, but rather among the high-risk portfolios and can have an equity quota of up to 90 percent. By default, the Ginmon portfolio also contains more shares than many competitors in the analysis. In the crash, this inevitably caused greater losses.
Investors should also keep in mind how diverse the landscape of the robo-advisor is. Most providers work with passive products such as ETFs, while others work with actively managed solutions. They also differ fundamentally when it comes to whether the equity quota is continually adjusted to market conditions or whether regular rebalancing only takes place in order to reset a portfolio to its original values. There are also certain factors that are taken into account depending on the provider. It is difficult to highlight one system per se as being more successful than another.
Crucial in the long run
The providers who surveyed € uro on Sunday about the test results agree on one point: The evaluated period is too short to provide a reliable statement about the quality of the respective robo-advisor. All houses emphasize that they have geared their strategies towards medium to long-term investment success. Short-term developments – even if they were as painful as in the past weeks – are almost never important for the concept.
Investors should not be guided by snapshots when choosing a robo-advisor, but rather by a convincing strategy, low costs and a wide range. In an analysis published on Thursday, the “Extra-Magazin”, specialist publication for passive investments, evaluated the robo-advisors active in Germany. In addition to the core criteria “costs” and “offer”, customer service and performance in 2019 were assessed.
With a maximum rating of five stars Quirion, Visualvest, Fintego and Growney were among the award winners. With 4.5 stars, the robo-advisors Ginmon, Whitebox and Scalable Capital were also rated as very good. This result largely coincides with the test of € uro on Sunday and the German Customer Institute (issue 30/2019). Investors should be guided by such extensive tests when choosing automated asset management rather than short-term fluctuations in value.
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