Robo Advisor Performance 2021
Posted on May 11, 2021
- The strong first and fourth quarter performance was enough to push both Schwab portfolios into the top 10 over the 1-year trailing period ending March 31, 2021
- Over the past year, Titan’s equities returned 71.96%. These strong returns led it to outperform its benchmark by 12.43%
- Robo advisors allocated to municipal bonds significantly outperformed
Value Drives Robo Performance in Q1, Titan Retains One-Year Spot
In the last several Robo Reports, the performance data has shown that robos with growth tilts in their equity holdings have fared better. That trend reversed over the past six months. The Schwab Domestic Focus portfolio placed first for both performance relative to the Normalized Benchmark and for equity performance in the first quarter. The standard Schwab portfolio, which has more international equities than the Domestic Focused portfolio, had the second-best equity performance and the sixth-best performance compared to the Normalized Benchmark in the first quarter. Schwab’s first quarter success was bolstered by the fact that it has one of the most value-oriented portfolios.
The strong first and fourth quarter performance was enough to push both Schwab portfolios into the top 10 over the 1-year trailing period ending March 31, 2021, when looking at performance compared to the Normalized Benchmark. While value stocks experienced a strong six months, growth stocks still outperformed in periods longer than a year.
Titan Invest, on the other hand, has a heavy growth tilt. In the final quarter of 2020, its two portfolios had the highest equity performance compared to their Normalized Benchmark, but in the first quarter of 2021, they had the lowest equity performance compared to their Normalized Benchmarks. For the 1-year period ending March 31st, 2021, however, Titan retained its top spot for both equity-only performance and performance versus the Normalized Benchmark. Over the past year, Titan’s equities returned 71.96%. These strong returns led it to outperform its benchmark by 12.43%. Titan differentiates itself from other robos by actively selecting individual stocks. At the end of the quarter, its three largest holdings were Paypal, Twilio, and Apple. These holdings are representative of the larger portfolio, which is tilted towards large-cap growth stocks.
Municipal Bonds Propel Fixed-Income Performance in Q1
In 2020, hesitant investors flocked to U.S. Treasury bonds and other high-quality bond offerings. In the first quarter of 2021, investors began to move out of those categories and back into high-yield fixed income as economic prospects improved. The tightening of credit spreads in the second half of 2020 and into 2021 helped municipal and corporate bonds despite rising interest rates. Municipal bonds also fared better than corporate bonds or Treasury bonds year to date. Fidelity and Fifth Third Bank OptiFi were the top two fixed-income performers over the first quarter. Both of their fixed-income portfolios consist entirely of municipal bonds. When looking over the 1-year trailing period, Interactive Advisors Legg Mason, TIAA SRI, and M1 were the top fixed-income performers. These portfolios hold higher allocations to corporate bonds. While municipal and corporate bonds both recovered in the second half of 2020 and the first quarter of 2021, corporate bonds have generally fared better over the past year.
Posted in PerformanceTagged Fidelity Go, Performance, Schwab, Titan Invest
