MoneyFarm or funny farm?

jnm21

Just looking to find some feedback on Moneyfarm having signed up and being unimpressed looking at the trend graphs of the funds they have given me.

The worst is seemingly a low risk one that the graph of shows minimal gains followed by sharp losses, which repeats exactly many times over about 5 years, showing an overall loss. I may not be an experienced investor, but I am confident in saying I don't want a bar of it!

Of the 7 given to me, there is 1 that given the choice I would want, but most of the 'better' ones seem to have done little or worse lost money over a number of years and turned in good gains in 6 to 18 months to make a decent return over the 3 to 5 year history. My concern is that this could make them a good investment if recent gains continue, but equally I worry that they may be overpriced and suffer a correction.

Oh and the final quandry for me is holding 3% in cash, which appears to be on a deposit basis with no potential to do anything other than depreciate.

I am not reacting to the 0.33% loss over the first few days, but it did make me keen to see the longer term trends which are what has me worried. From my limited knowledge I expected an upward trend with a few wobbles along the way and a lower smoother pitch for the lower risk ones.

Am I wrong to be worried?

Malthusian

Is this actual past performance of their portfolios or is it some kind of simulated performance for the level of risk being taken?

All investment portfolios will have some good years, some flat years and the occasional crap years. Depending on the equity content and the asset allocation, the higher risk ones will suffer larger swings in value and larger falls but should deliver higher returns overall. With a robo-flogger like MoneyFarm the decision should in theory be based purely on how much risk you are prepared to accept. Not on past performance. If you want to pick funds based on past performance then you're on the wrong platform, leaving aside the question of whether that is a good idea or not.

There is not really enough information in your post to go on to say whether their portfolios have done well or not. They are probably OK, i.e. they are unlikely to deliver catastrophic underperformance or permanent and irrecoverable losses, as long as you do not panic and cash out. However if you want a simple diversified investment that requires relatively little investor input there are better options available. E.g. the board's darling Vanguard Lifestrategy on a cheap DIY platform.

jnm21

Thanks - you obviously know the topic & you have reassured me.

There are between 3 and 5 years history shown for each of the funds (I assume that they are real history).

EDIT: Looks like it is real history. The first one I described is ISIN LU0321464652 which does have 5 years history having googled it.

murmeltier

The one ETF you were looking at - LU0321464652 - is the dbx Sterling Cash ETF which invests in the money market.

The "sharp losses" you refer to I believe are when the ETF goes ex-div.

E.g. on 1/4/2016 the ETF paid out 2.1818 per ETF and the nav dropped around that date by £2.18 from £185.58 to £183.40

This is fully expected, is not an actual "loss" and does not reflect badly on this particular ETF.

Little_Miss_Moneysaver

Hello all,
Just thought i'd share my personal experience in investing with MoneyFarm - incase it helps anyone out there.

Like everyone else, i was getting fed up of low interest rates even on fixed-rate savings bonds.
I would like to retire someday, so couldn't see how 1% or 2% interest rate was going to facilitate this. (Assuming interest rates didn't suddenly shoot up, and the new "normal" interest rates were going to hover around the 1-2% mark, instead of the old 6% mark).

So, after reading up a Lot on investing, i decided it was the way forward. :j
However, the problem with reading about investing, the more you know, the more "paralysis by analysis" you get also! :mad:

Anyway, I opened a Moneyfarm (General investment account), a year ago, and gradually drip-fed about £90k into it. I decided to keep an excel spreadsheet, and every week or so, just kept tabs on the performance of my Moneyfarm account.

The volatility on my portfolio, has ranged from 10% Up, to -0.02% Down (depending on the day i logged in to look at my account) over the past year.
I am investing with a 10+year horizon in mind, so i know there will be up's and down's in the valuation. But over the 10+ years, i would expect to fare better than stick the money in a cash fixed rate savings account.

After reading the Vanguard Life Strategy thread elsewhere on this website, I also have a Stock & Shares ISA investing in Vanguard Lifestrategy 60%.
I have about £30k invested within the ISA wrapper. I chose Cavendish Online as the platform, due to the Low Platform fees, and also the ease of using Cavendish's website.
Yes, i know Cavendish's website looks a bit old-fashioned, but i liked the transparency of their pricing structure, and how easy it was to add fund to basket, and pay for it.
The volatility of my Vanguard Portfolio also ranged from up to down (depending on the day i logged in to look at my account).

I am not a techno geek, nor a math geek, so i was looking for a simple investment path, with minimal hassle, but likely good results over the long run.

I have to say i really like how my account is displayed on MoneyFarm. It tells me at a glance, how much i've paid in, how much my investment is worth, and which ETF's it's all invested in.
The staff have answered any questions quite quickly via email, and i like clicking on the graphs, which show the trend that my money has taken over the past year.

The downside is that it does cost more than the passive Vanguard tracker via Cavendish - but i feel i can sleep at night knowing that someone else is also keeping an eye on that £90k (and it's not all my responsibility).

In comparison, I got a quote from an IFA to use their own discretionary platform, and the IFA's fees for that were a shocking 2.75% - which made Moneyfarm look cheap in comparison!

Furthermore, i know that rebalancing is important and MoneyFarm does this automatically for you (twice so far in one year). Which is great, because i have no idea how one would do this manually!

My Vanguard Lifestrategy fund thankfully also rebalances itself, so it's still a keeper within my Stocks & Shares ISA.

If anyone does know how to manually rebalance, feel free to post here - as i do have a small amount of money in a 'model portfolio' which doesn't rebalance itself, so I have ignored that pot for now!

Anyway, apologies for the long post (i tend to read posts, but rarely post on one).
I just thought i'd share my personal experience with Moneyfarm (which has been positive) - in my baby steps into the world of investing.

Eco_Miser

Little_Miss_Moneysaver wrote: »

If anyone does know how to manually rebalance, feel free to post here - as i do have a small amount of money in a 'model portfolio' which doesn't rebalance itself, so I have ignored that pot for now!

http://monevator.com/how-to-rebalance-portfolio/
One of many useful articles from the Monevator team.

elephantrosie

liking this post. please post more about moneyfarm. im thinking of opening an account with them.

elephantrosie

aajax42 wrote: »

They are offering a code through money observer at the moment that gives £20k managed free.

code please?

Little_Miss_Moneysaver

http://monevator.com/how-to-rebalance-portfolio/
One of many useful articles from the Monevator team.

Thanks very much Eco Miser - for the article on Rebalancing!
Your helpfulness is much much appreciated! :A

The truth is, I had already come across that article on Monevator's website in the past - in all my reading/research into investing vs. just saving in fixed rate cash bonds.

However, i don't quite understand the nuts-and-bolts on how to actually do it - from a mathematical point of view, especially since doing major mathematical calculations is not my strong point!

So, on the model portfolio that is listed on Cavendish Online's website, which i have some money in, but been ignoring since i found Moneyfarm and Vanguard Lifestrategy:

a) any advice on how i figure out which funds have done well vs. poorly over the past few years, and

b) how exactly do i sell part of the funds that have done well, and transfer that money to the ones that have done more poorly?

c) I understand that all asset classes don't go up at the same time - which is why a diversified portfolio is important. But don't understand how to figure out what has / has not done well - for rebalancing purposes!

d) This is one of the reasons Moneyfarm and Vanguard Lifestrategy appealed so much - they did all the math that i don't know how to do!

Apologies if i come across as a dum-dum, but i don't work in the financial services world - so all this investing business is very new (and bit scary) to me.
I've just been lucky to have a well paying job, so over the years just taken the safe route of saving with cash.

I have read other articles on the Monevator's website. What a clever clever man!! How does he know all this intricate stuff?!

I can't say i've understood all the content on his website - as some of it is way beyond my basic understanding.

However, for anyone else out there in my position, i did download Monevator's books onto my kindle via Amazon.
These were amazingly well written, clear, basic language, and easy to understand for the newbie. I can't recommend them enough! :T
Look on Amazon for "John Hulton" - his 2 books on DIY Pensions, and DIY Simple Investing, are superb.

Hope that helps anyone else out there

Eco_Miser

I'm not a financial whizz-kid either, and I've never actually re-balanced, but here goes.

a)Keep a spreadsheet listing the values (and unit prices) of each of your investments, their total value, and the percentage of that total value that each investment is.
Have a line doing this for when you bought them and now and for any intermediate points if you have the data (just so you get a idea of how they're moving relative to each other.
Any with an increased percentage are doing well, any with a lower percentage, less well.

b) By looking at the spreadsheet, work out which funds need to be sold to bring them down to the original percentage, and which ones need to be bought. Use another line on the spreadsheet to do this. Keep trying guesses until it comes out right, or reverse the formulas.
Ignore the funds that only moved a bit.
Now you know how much to sell and how much to buy - the totals of each should be the same unless you're adding more money.
Go on your platform, and sell the appropriate amount of what needs selling.
Wait for the cash to arrive (or at least for it to be available for trades - I don't know Cavendish Online's policy on when sales money becomes available).
Buy what needs to be bought.
Update your spreadsheet.

c) see a. Keep your spreadsheet up to date (monthly perhaps).
Take notice of the varying percentages.

d) You could sell everything except LifeStrategy, and buy more of that. Problem solved.