Robo Investing - too good to be true?

masonic

adindas wrote: »

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

Government bonds have become quite volatile of late and are capable of swings of more than 10% over a 1 year period. Corporate bonds are somewhat more volatile again. Recent monetary policy has made these investments considerably riskier than they have been historically.

ARandomMiser

dunstonh wrote: »

How much is involved?

A significant 6 figure sum with IFA and similar self invested/Robo. I split a sum of money into two back in 2008. I gave exactly half to an IFA and I took control of half (and I had zero knowledge of funds, OEICS, Unit Trusts, ETFs etc.) - in the early days I used mostly trackers but did buy into a few specific funds and shares (the real stars for me were a speculative investment I made in both Carnival and Royal Caribbean - to get some onboard credit).

In the last few years I have been using more Robo investors and have been very pleased with the results (they have been performing just as well as the funds I am paying an IFA to pick). Overall in the last 9 years my half is slightly ahead of the IFA managed amount (it is a small difference, a little under £8K)

The reason I didn't give all the money to the IFA was simply because it was a new IFA (recommended by a friend) because my previous IFA had gone bankrupt.

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.

Statements like that is another reason why I am losing trust in IFA's - if you don't agree with them or don't massage their ego enough they get very patronising and make silly, irrelevant comments. Maybe the reality is that robo investors are making similar decisions (or possibly better) than human IFAs.

dunstonh

Statements like that is another reason why I am losing trust in IFA's - if you don't agree with them or don't massage their ego enough they get very patronising and make silly, irrelevant comments. Maybe the reality is that robo investors are making similar decisions (or possibly better) than human IFAs.

Now its you being silly. We have frequently seen new young posters on this forum talk about making their first investment and they talk about how many likes it has on facebook or how many good trustpilot reviews it has. They do not have a clue about the investment itself. They are measuring it by internet presence. Some of things have even turned out to be scams.

Ray_Singh-Blue

I do a type of robo-investing, except without the robo. Which is great because I got the 20-28% return last year and the robo got nada.

I think there are jobs for which robots are great. Assembling electronic equipment, for example. But other jobs where they are not necessary. Following the random twists and turns of global investment markets is one. A human can do it really well sans-robo, just by buying a world tracker ETF.

Lets say robos really did have the edge, Asimov style. Winner takes all, and so ultimately all capital needing a home would find itself under robo control. But wait - in this case, a humble tracker would still match the performance of the average robo.

They really are great at welding cars together though.

bigadaj

Ray_Singh-Blue wrote: »

I do a type of robo-investing, except without the robo. Which is great because I got the 20-28% return last year and the robo got nada.

I think there are jobs for which robots are great. Assembling electronic equipment, for example. But other jobs where they are not necessary. Following the random twists and turns of global investment markets is one. A human can do it really well sans-robo, just by buying a world tracker ETF.

Lets say robos really did have the edge, Asimov style. Winner takes all, and so ultimately all capital needing a home would find itself under robo control. But wait - in this case, a humble tracker would still match the performance of the average robo.

They really are great at welding cars together though.

Though your world tracker etf will largely be controlled by computers rather than humans, because they are cheaper.

Gambler101

Slow and steady wins the race! Looking for 20%+ returns is like going to a casino!!

ARandomMiser

dunstonh wrote: »

We have frequently seen new young posters on this forum talk about making their first investment and they talk about how many likes it has on facebook or how many good trustpilot reviews it has. They do not have a clue about the investment itself. They are measuring it by internet presence. Some of things have even turned out to be scams.

So not really much different to the lottery of selecting an IFA - many cowboys and scam artists there. Also, it is not just 'new young' (again a little bit patronising) it is 'new old' and in some cases 'seasoned old' and 'seasoned young' doing exactly what they should do when they first read about something - try to get more information.

Linton

ARandomMiser wrote: »

.....
In the last few years I have been using more Robo investors and have been very pleased with the results (they have been performing just as well as the funds I am paying an IFA to pick). Overall in the last 9 years my half is slightly ahead of the IFA managed amount (it is a small difference, a little under £8K.
.........

How sure are you that you are comparing like with like? Differences in risk could have a major impact on relative performance. It seems likely that an IFA would tend to choose lower risk investments than many private investors.

ARandomMiser

Linton wrote: »

How sure are you that you are comparing like with like? Differences in risk could have a major impact on relative performance. It seems likely that an IFA would tend to choose lower risk investments than many private investors.

Oh dear, another IFA back-covering get-out-of-jail statement that means nothing is ever down to their decisions - it is just the market, timing, fluctuations etc. etc. .... a never ending list of excuses. I fully understand that markets go up and down but I wish I could tell my customers that they have to pay me a percentage of their market value and even if my advice is bad then you still have to pay me - and if you don't like then go elsewhere but don't any bad advice on me.

As far as risk is concerned, I did all the IFAs little risk tests (several times and always come out slightly above medium and I did similar with the Robo investors and again came out medium or slightly above (and they then picked the relevant portfolio). The IFAs I have used have known of the other funds that I have personally selected and, in the main they haven't criticised them or suggested that they (as part of a wider portfolio) are anything other than at the level of risk they would expect. Naturally they have tried to get those funds off me - and I have told the last 2 IFAs that if they out perform my funds for two consecutive years they can have the full lot (maybe a bit patronising, but if they can dish it out they can take it )

Sorry, at the minute i have a real downer with IFAs. Maybe I have been unlucky and I would like one that I could really trust (and they would get my full portfolio). I expect to hear a list of excuses and 'it isn't my fault' phraseology, but as soon as they start focussing on that I start distrusting them (it is almost as if they are planning for failure and getting their excuses in early).

bigadaj

ARandomMiser wrote: »

Oh dear, another IFA back-covering get-out-of-jail statement that means nothing is ever down to their decisions - it is just the market, timing, fluctuations etc. etc. .... a never ending list of excuses. I fully understand that markets go up and down but I wish I could tell my customers that they have to pay me a percentage of their market value and even if my advice is bad then you still have to pay me - and if you don't like then go elsewhere but don't any bad advice on me.

As far as risk is concerned, I did all the IFAs little risk tests (several times and always come out slightly above medium and I did similar with the Robo investors and again came out medium or slightly above (and they then picked the relevant portfolio). The IFAs I have used have known of the other funds that I have personally selected and, in the main they haven't criticised them or suggested that they (as part of a wider portfolio) are anything other than at the level of risk they would expect. Naturally they have tried to get those funds off me - and I have told the last 2 IFAs that if they out perform my funds for two consecutive years they can have the full lot (maybe a bit patronising, but if they can dish it out they can take it )

Sorry, at the minute i have a real downer with IFAs. Maybe I have been unlucky and I would like one that I could really trust (and they would get my full portfolio). I expect to hear a list of excuses and 'it isn't my fault' phraseology, but as soon as they start focussing on that I start distrusting them (it is almost as if they are planning for failure and getting their excuses in early).

Sounds like you would be better off diying to me.