Robo Investing - too good to be true?

dunstonh

ARandomMiser wrote: »

I have money invested for me through an IFA and money I put into one of those Robo advisors. I am slightly above medium risk profile. Overall there is very little difference but the Robo comes out very slightly ahead once all costs have been taken into account.

That is one, of several, reasons as to why I am considering getting rid of my IFA and doing things myself.

How much is involved?

For example, I use multi-asset funds for small investors. This includes VLS, L&GMI etc. For larger investors, I use bespoke portfolios and they have a record of beating the likes of VLS.

Now, if you are a small investor and dont need an adviser for advice but are using them for admin then going DIY does make sense and would save you money. If you are a larger investor then a structured bespoke portfolio has good potential to be better after charges. Although nothing is ever guaranteed.

Robo-advice is little different from holding L&GMI or VLS. Except usually a bit more expensive. Indeed, our robo-advice offering uses the superclean version of L&GMI.

Robo-advice will be a succeed in the end. It will appeal to the younger generations that measure quality by the number of facebook likes and how the app looks. It won't appeal to those that want to take their investments seriously.

Sue58

dunstonh wrote: »

How much is involved?

For example, I use multi-asset funds for small investors. This includes VLS, L&GMI etc. For larger investors, I use bespoke portfolios and they have a record of beating the likes of VLS.

Now, if you are a small investor and dont need an adviser for advice but are using them for admin then going DIY does make sense and would save you money. If you are a larger investor then a structured bespoke portfolio has good potential to be better after charges. Although nothing is ever guaranteed.

When you say you use multi-asset funds for small investors - can you clarify is this for example up to £100K or less/more?

Also, why do you use/recommend both VLS & L&GMI funds rather than have a preference for one or the other? Or, is there really not that much difference apart from L&GMI funds are more actively managed for the bond element perhaps?

dunstonh

When you say you use multi-asset funds for small investors - can you clarify is this for example up to £100K or less/more?

There can be a little bit of sway around that figure but we wouldnt normally do a bespoke portfolio for under £100k. We have some multi-asset investors with over £100k but that it more to do with their knowledge and understanding.

Also, why do you use/recommend both VLS & L&GMI funds rather than have a preference for one or the other?

They are only two of a number we use. VLS was around before L&G in terms of their option. So, some of that is historical. There are a number of managed funds we use as well and some of those have blasted both L&G and VLS out of the water. Although some managed funds do end up disappointing.

Or, is there really not that much difference apart from L&GMI funds are more actively managed for the bond element perhaps?

Structurally, I prefer the L&G over the VLS because it has a wider spread and allows for economic data and long term assumptions and will adjust the holdings on a more fluid basis.

Remember investing is about opinion. There are some things you can do wrong (and actually still end up getting lucky for a period) but there are so many options available. You could have 10 different people in 10 different funds and all of them could be suitable and right.

Sue58

dunstonh wrote: »

There can be a little bit of sway around that figure but we wouldnt normally do a bespoke portfolio for under £100k. We have some multi-asset investors with over £100k but that it more to do with their knowledge and understanding.

They are only two of a number we use. VLS was around before L&G in terms of their option. So, some of that is historical. There are a number of managed funds we use as well and some of those have blasted both L&G and VLS out of the water. Although some managed funds do end up disappointing.

Structurally, I prefer the L&G over the VLS because it has a wider spread and allows for economic data and long term assumptions and will adjust the holdings on a more fluid basis.

Remember investing is about opinion. There are some things you can do wrong (and actually still end up getting lucky for a period) but there are so many options available. You could have 10 different people in 10 different funds and all of them could be suitable and right.

Thank you for your concise and very informative response.

I was also looking at the HSBC Global Strategy/World Selection funds and the Baillie Gifford Managed fund as options to VLS/L&G, however, as you said there are so many options!

adindas

Just see this advert about Robo Fund
£500 'robo-investing' cashback gives you a 10% head start By investing £5000,-


http://www.moneysavingexpert.com/latesttip/#cashback
http://www.moneysavingexpert.com/savings/robo-funds

I an aware about the risk of investment where the capital is at risk.
But it seems a very good value by investing for one year aiming solely on cash back + potential return from investment.

Is it any good ?
Where is the catch ??


It seems a very good one + Return from investment

wonder where is the catch ?

bowlhead99

The potential loss on a one year period is greater than the cashback.

AnotherJoe

The loss though would be independent of the fact there's a cashback. A loss is possible on any investment.

ricky_v

I signed up for the £500 cashback and set up the profile as low risk, invest for 1 year. The portfolio came out with 70% as cash and government bonds, the other 30% as corporate bonds and inflation linked bonds. A risk definitely but a risk worth the cashback IMO when you just set it up as cash and bonds, no equities.

"Where is the catch ??"

There was only 500 sign ups avaliable, which went in 24 hours, plus you have to keep the investment in for a year to get the cashback.

adindas

ricky_v wrote: »

I signed up for the £500 cashback and set up the profile as low risk, invest for 1 year. The portfolio came out with 70% as cash and government bonds, the other 30% as corporate bonds and inflation linked bonds. A risk definitely but a risk worth the cashback IMO when you just set it up as cash and bonds, no equities.

"Where is the catch ??"

There was only 500 sign ups avaliable, which went in 24 hours, plus you have to keep the investment in for a year to get the cashback.

It seems it is very low risk, any comment on this or someone else might have firsthand experience with this investment ? ?

Thrugelmir

adindas wrote: »

It seems it is very low risk, any comment on this or someone else might have firsthand experience with this investment ? ?

Bonds aren't immune to changes in capital value. Particularly so if they are purchased at above nominal value. By default they can only redeem at par on maturity as well.

BOE is sitting on £10 billion of Corporate grade debt. When this will sold back is as yet unquantified. The Fed is starting to unwind it's enormous balance sheet as well. By selling back into the market. The consequence of which will be to push yields higher over time.