Best Robo for Performance at a Low Cost 2020
Posted on August 10, 2020
Best Robo for Performance at a Low Cost
Runner-Up: Axos Invest
The Robo Ranking performance score is based on the account’s Sharpe ratio and performance compared to the account’s Normalized Benchmark. This Ranking uses data from the last two and a half years.
SigFig wins the Best Robo for Performance at a Low Cost award. It took the top spot in performance with an annualized return of 0.38% above its Normalized Benchmark, while the average robo underperformed its Benchmark by -1.11%. Additionally, SigFig’s Sharpe ratio was 0.26, while the group average was 0.16, meaning SigFig not only had compelling returns but had an efficient level of risk taken to achieve those returns. SigFig’s portfolio benefited from a few major factors. First, its stock portfolio avoided a value tilt and an international tilt which were both detrimental. Second, its bond allocation was predominantly allocated to high-quality fixed-income ETFs, including a large allocation to a Barclays Aggregate ETF and allocations to US TIPS ETFs. These choices helped bolster the higher Sharpe ratio as high quality bonds offer diversification benefits when paired with stocks.
From a fee perspective, SigFig is a competitive offering with a 0.25% management fee and 0.07% in underlying fund fees. SigFig lacks the digital features of Wealthfront or Personal Capital, and its financial planning offering does not score at the top of the pack, but its compelling performance cannot be overstated. This robo is recommended for those that are looking for an efficient portfolio, low expenses, and a strong track record of performance.
Axos Invest (formerly WiseBanyan) placed second for Best Robo for Performance at a Low Cost. In this Ranking and in previous ones, Axos has consistently been a top performer and only charges 0.24% annually, which is on par with other inexpensive products. It is one of only two robos to outperform its Normalized Benchmark and has the second-best Sharpe ratio, meaning that it is providing superior returns when adjusting for the risk of the portfolio. Over the 2.5-year period analyzed for this Ranking, the total portfolio returned 4.38% annually, beating the average portfolio’s return of 3.22%.
Axos Invest’s product is a digital-only platform, meaning there is no access to live advisors for clients. Unlike most other digital planning tools, Axos clients work through a series of modules, answering questions about their financial lives that cover a broad set of topics, including student loans, mortgages, and budgeting. The software then delivers advice on areas that it believes 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. Unfortunately, the downside to this method is it does not produce a comprehensive, integrated, and multi-goal plan. For those seeking a robo advisor with a strong performance track record, Axos is a quality choice. However, its tool might not be robust enough for those with more complex financial planning needs.Posted in Best Robos
Tagged Axos Invest, Best Robo, Fidelity Go, Performance