Best Robo for Performance at a Low Cost 2020

Best Robo for Performance at a Low Cost

Winner: Fidelity Go
Runner-Up: Axos Invest

The Robo Ranking™ performance score is based on the performance of the account we track at the provider measured by its performance compared to the Normalized Benchmark, as well as the account’s Sharpe ratio. This ranking analyzes a period of two and a quarter years. We awarded the Best Robo for Performance at a Low Cost to the top-performing robos, Fidelity Go and Axos Invest. Fidelity Go and Axos Invest are also the top-performing robos based solely on their performance compared to the Normalized Benchmark in the trailing three-year period.

Fidelity Go charges a flat, all-in cost of 0.35% of assets under management. All funds held by Fidelity Go come with zero internal operating expenses. Therefore, while robos like Vanguard and Wealthfront have lower management fees, Fidelity Go’s cost is right in line with other leading providers when including the average weighted expense ratio of the funds held in the portfolios. Fidelity Go has a history of strong performance. It placed first for total portfolio and equity performance, and second for fixed-income performance over the three-year trailing period.

Axos Invest (formerly WiseBanyan) placed second for Best Robo for Performance at a Low Cost. In addition to having the second-best performance over the three-year period, there is no management fee for investors in their most basic service plan for taxable accounts, regardless of account size. Axos Invest also offers a la carte pricing for additional services, like tax-loss harvesting. While taxable accounts carry no management fee, investors are required to purchase the tax-efficiency package in their IRA accounts at Axos Invest. Even including this cost, Axos Invest’s fee of 0.24% annually for its IRAs is on par with other inexpensive products. While Schwab also offers free management of taxable accounts at its lowest service level, Axos does not mandate a high cash balance in their models, which could hinder long-term performance.

Axos Invest’s platform is a digital-only platform, meaning there is no access to live advisors for clients. Their financial planning tools follow a different design than most other digital planning tools. Axos clients work through a series of modules, answering questions about their financial lives. These questions cover a broad set of topics, including student loans, mortgages, and budgeting. The software then delivers advice on areas the client should focus on next, many of which are not directly related to investments. This approach covers a wider breadth of personal finance topics than many other tools and can help clients identify important areas of their holistic financial picture that need to be addressed. The downside to this method is it does not produce a comprehensive, integrated, multigoal plan.

For those seeking a best-performing robo, Axos is a quality choice. However, those with more complex financial planning needs or the desire to be able to work with a live advisor may want to consider other options.