Robo Advisor Performance Jan. 2020
Posted on February 21, 2020
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Axos Invest Emerging as Performance Leader
Axos Invest has been a strong performer. Their fixed-income holdings placed third in the one-, two-, and three-year time periods. A large allocation to an investment-grade corporate fixed income fund has performed well over the past years. Exposure to high-yield debt has also boosted their performance.
Axos Invest has a relatively simple equity portfolio. It relies heavily on a domestic all-cap ETF, which means they have heavy exposure to large caps. Large caps have consistently outperformed small- and mid-cap stocks over the past three years. Maintaining a market-neutral approach to value and growth has also helped them outperform many of their peers that tilt towards value.
Fidelity Go Maintains Strong Performance
Fidelity Go has maintained its top performer spot over the three-year time period. A market-neutral stance towards growth and value, as well as a high allocation to domestic large caps, has propelled their equity performance. Fidelity Go’s fixed-income portfolio has a longer maturity than most. This has contributed to its performance over a period during which bonds with longer maturities have outperformed their shorter-maturity counterparts.
SigFig Takes Top Four-Year Total Performance Leader
Over the three-year and four-year periods, SigFig is a top performer. It placed first for the four-year total and equity returns and third for total returns in the three-year period. SigFig’s portfolio holds a larger percentage of its international holdings in emerging markets versus foreign developed than its peers do. Emerging markets have significantly outperformed foreign developed markets over the four-year period. Their domestic equity allocation relies on total stock market ETFs. This choice has kept their portfolio from being overweight in mid- or small-caps and from taking on a significant value or growth tilt. Both of these characteristics have helped them achieve their long-term success.
Schwab Holds onto Long-Term Fixed Income Top Performer but Lags in Total Performance
Schwab has held onto its strong fixed-income performance in the three- and four-year periods. The portfolio tilts towards longer-maturity issues that have driven their outperformance. Although the allocations are small, exposure to high-yield and international bonds have also boosted performance during these periods.
Although Schwab has strong three- and four-year fixed income performance, its total performance has not performed well in the one-, two-, and three-year periods based on performance compared to the Normalized Benchmark. High international exposure, a value tilt, and high allocation to cash has held back the performance of Schwab’s portfolio.
One- and Two-Year Trailing Performance Highlights
E*Trade’s fixed income portfolio has stood out, placing first in the one-year trailing period and second in the two- and three-year periods. Their fixed-income portfolio is made up of nearly equal portions of an intermediate corporate bond fund and a Barclays aggregate bond index ETF. Both funds sit primarily in the intermediate maturity range and hold only investment-grade issues. This
Zacks had the best equity performance in the two-year period. Zacks relies heavily on an S&P 500 ETF and a low allocation to international holdings that, together, have helped them drive strong equity performance.
Wealthsimple made significant changes to its portfolio in the fourth quarter. They nearly doubled their international exposure, as a percent of equities, and replaced some existing international funds with global and developed foreign markets funds. These new holdings are advertised as “Minimum Volatility” funds. These funds significantly underperformed other domestic and foreign funds. In the fourth quarter, Wealthsimple had the poorest performance by more than a percentage point.
Prudential performed second best over the one-year period for both total and equity-only performance. Relying heavily on an S&P 500 ETF and maintaining low international exposure has benefited this portfolio. Within their fixed income holdings, Prudential’s exposure to international and high-yield funds propelled their top performance
Tagged Axos Invest, E*Trade, ETF, Fidelity Go, Performance, Prudential, Schwab, SigFig, Wealthsimple, Zacks Advantage
