"Robo-Investors" - Nutmeg, Moneyfarm et al
Discussion
So trying to get the house in order this year. We have some money saved just sitting in normal bank accounts (around 25k) and want to do something with it. After somewhere I can pay in monthly as a sort of fire and forget thing initially, whilst I find the time to learn more about investing.
I had a look at things like Nutmeg, Wealthify and Moneyfarm. They seem quite ok for a novice to get started?? From last years results it seemed none of these services outperformed the FTSE100. They weren't miles off, but suspect that could be different this year with Brexit!
I was drawn to the Moneyfarm one as their more risky strategies seemed more worldly? whereas other still seem to have a high proportion of UK.
I guess there is no right answer and I should just pick one, see how it goes... can always move.
Has anyone got experiences of any of the three above? I saw a lot of posts on here about Nutmeg losing money, but people were being far too short term. Nutmeg seems to have a very good app-platform. Wealthify is now owned by Aviva which is reassuring I guess, and Moneyfarm? I heard they started out quite a while ago in Italy with good success, even though they haven't been going in the UK that long.
I had a look at things like Nutmeg, Wealthify and Moneyfarm. They seem quite ok for a novice to get started?? From last years results it seemed none of these services outperformed the FTSE100. They weren't miles off, but suspect that could be different this year with Brexit!
I was drawn to the Moneyfarm one as their more risky strategies seemed more worldly? whereas other still seem to have a high proportion of UK.
I guess there is no right answer and I should just pick one, see how it goes... can always move.
Has anyone got experiences of any of the three above? I saw a lot of posts on here about Nutmeg losing money, but people were being far too short term. Nutmeg seems to have a very good app-platform. Wealthify is now owned by Aviva which is reassuring I guess, and Moneyfarm? I heard they started out quite a while ago in Italy with good success, even though they haven't been going in the UK that long.
Otispunkmeyer said:
From last years results it seemed none of these services outperformed the FTSE100. They weren't miles off, but suspect that could be different this year with Brexit!
Start by benchmarking them against a global tracker. If any of them have outperformed on a risk adjusted basis, please report back.Otispunkmeyer said:
From last years results it seemed none of these services outperformed the FTSE100. They weren't miles off, but suspect that could be different this year with Brexit!
Forget the FTSE100 as a benchmark - you can buy shares from the whole world, so as Derek says, benchmark against a global tracker. I held some Nutmeg for a while and came to the conclusion their management and ETF trading didn't seem to be adding any significant value beyond giving them something to post about every month.
xeny said:
Otispunkmeyer said:
From last years results it seemed none of these services outperformed the FTSE100. They weren't miles off, but suspect that could be different this year with Brexit!
Forget the FTSE100 as a benchmark - you can buy shares from the whole world, so as Derek says, benchmark against a global tracker. I held some Nutmeg for a while and came to the conclusion their management and ETF trading didn't seem to be adding any significant value beyond giving them something to post about every month.
Btlguru said:
'Genuine question', are they seeking to run the same level of risk as a global equity portfolio?
I think they're aiming for less risk, although note Nutmeg for example offer different risk levels. One of the factors in me moving away from them was looking at the make up of a maximum risk portfolio and seeing a physical gold ETF amongst the components - I wanted more risk than they seemed to offer.xeny said:
I think they're aiming for less risk, although note Nutmeg for example offer different risk levels. One of the factors in me moving away from them was looking at the make up of a maximum risk portfolio and seeing a physical gold ETF amongst the components - I wanted more risk than they seemed to offer.
In which case, a global equity index isn't a fair benchmark!A small gold (or long/short dated Gilt) position is often used to manage volatility in a large equity position when there is a higher level market uncertainty (as there currently is).
It is quite normal and doesn't detract from the risk/reward of a portfolio. It is just a hedge to support the majority positions. I wouldn't let this put you off.
Having said this, I just don't see how these "robo" advice start-ups can survive. Moneyfarm had a turnover last year of just over £1m. Its overheads were just over £15m. Unsurprisingly it lost just shy of £14m of other people's money over 12 months. This will not be allowed to continue indefinitely.
Nutmeg is broadly the same.
In my mind they are the same format as old dot com businesses. No track record, no turnover, no profits, no dividends, no way of achieving any of these without burning through other people's cash.
I have no problem with start ups (we all have to start somewhere) but I would not place my life savings with one!
It is quite normal and doesn't detract from the risk/reward of a portfolio. It is just a hedge to support the majority positions. I wouldn't let this put you off.
Having said this, I just don't see how these "robo" advice start-ups can survive. Moneyfarm had a turnover last year of just over £1m. Its overheads were just over £15m. Unsurprisingly it lost just shy of £14m of other people's money over 12 months. This will not be allowed to continue indefinitely.
Nutmeg is broadly the same.
In my mind they are the same format as old dot com businesses. No track record, no turnover, no profits, no dividends, no way of achieving any of these without burning through other people's cash.
I have no problem with start ups (we all have to start somewhere) but I would not place my life savings with one!
Btlguru said:
Derek Chevalier said:
They have to be seen to be doing something to justify their existence, but whether this translates into genuine value add is another question...
'Genuine question', are they seeking to run the same level of risk as a global equity portfolio?Derek Chevalier said:
To clarify, global tracker being a mix of equity and high quality bonds. Use Vanguard Lifestrategy as a broad proxy and if any have beaten that on a risk adjusted basis and also with a lower drawdown (especially during Q4 2018) we can do some more digging.
Makes sense, thanks.Btlguru said:
Derek Chevalier said:
To clarify, global tracker being a mix of equity and high quality bonds. Use Vanguard Lifestrategy as a broad proxy and if any have beaten that on a risk adjusted basis and also with a lower drawdown (especially during Q4 2018) we can do some more digging.
Makes sense, thanks.If I look at Nutmeg performance level 5 I see a 5 year return of 12.8% and a loss of 5.9% in 2018. We don't know the volatility, but for me drawdown is at least as important.
https://www.nutmeg.com/fully-managed-portfolios
A 100% global equity portfolio fell less than the level 5 portfolio in 2018, yet would've (obviously) returned a lot more over the 5 year period.
http://www.morningstar.co.uk/uk/etf/snapshot/snaps...
Even the global bond fund gave a broadly similar return.
http://www.morningstar.co.uk/uk/funds/snapshot/sna...
Maybe I've misunderstood the Nutmeg numbers - second pair of eyes would be useful. Would obviously have to include platform costs but these are relatively insignificant.
Btlguru said:
In which case, a global equity index isn't a fair benchmark!
Acknowledged - sloppy writing, not aided by the variety of make up of the various portfolios Nutmeg offer. Note also that the makeup of a given risk level appears to vary over time, which is mostly what I was thinking of when I said less risky - I get the impression they move to what they consider lower risk assets when they perceive market risk to be higher.Btlguru said:
Derek Chevalier said:
Derek Chevalier said:
xeny said:
and seeing a physical gold ETF amongst the components
Interesting. I'm not sure why they would do that.Ditto
‘Hedged’ must refer to currency hedging?
Thanks for the responses guys. More research needed perhaps. I wouldn’t be sticking 25k in off the bat anyway, more like a few k and just drip feed. We will likely use some of the money this year for home improvements.
My wife has a fairly large ISA pot with quilter Cheviot... though we had a letter through at the start of the year saying it had lost 10%!
Vanguard gets mentioned on here a lot ? Worth looking at?
My wife has a fairly large ISA pot with quilter Cheviot... though we had a letter through at the start of the year saying it had lost 10%!
Vanguard gets mentioned on here a lot ? Worth looking at?
Edited by Otispunkmeyer on Sunday 3rd February 12:07
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