90% of all robo-advisor portfolios significantly lag S&P 500 in the high equity category
TIAA and Wealthfront best performing portfolios across all investment categories
NEW YORK--(BUSINESS WIRE)--As robo-advisors head toward the $1T asset mark, new performance data from Nummo, a leading budgeting and financial management platform and app, shows that the majority did not come close to beating the market in 2019. Today, Nummo released the Nummo Robo-Advisor Performance Ranking 2020, comparing 2019 full-year performance of over 300 portfolios from 19 robo-advisors across all investment categories, from the most aggressive to the most conservative.1
The top standout for best performing taxable “just invest” portfolios was TIAA, winning a top three spot in each of the Growth, Balanced, Income and Conservative categories. Wealthfront wins best performing “retirement” portfolio in four out of five categories. Sogo Marketriders and Stash also performed well in some of the categories.
The top category results are as follows:
The Value category which allows up to 100% in equity allocation showed how challenging the 2019 market was for investment advisors. All but four of the 50 top robo-advisor portfolios in this group underperformed the S&P 500 which was up 30% in 2019. The average performance in this category was 22% with the bottom three portfolios returning 8% or less to investors.
The top three robo-advisor portfolios were Stash Invest “Clean & Green,” up 43.81%, Aspiration “Redwood,” up 37.30% and Stash Invest “Blue Chips,” up 31.43%. While Schwab’s “94% Stock” portfolio was up 22.7% for example, the two portfolios at the bottom were Wealthsimple “Risk Level 8,” up 7.70% and SoFi Wealth “Moderately Aggressive,” up 7.59%.
The Growth category that allows up to 75% equity exposure showed an average return of 18.71% across all portfolios. TIAA won the top three spots for taxable “just invest” portfolios, all up around 22%. Top three “retirement” portfolios came from Wealthfront, all up 23% or more.
The bottom three “retirement” and taxable “just invest” portfolios returned 8% or less. JP Morgan’s “Growth” portfolio for example was up 8.13% lagging behind both the index and most of its peers.
The majority of portfolios in the Balanced category (max. 60% equity) underperformed the benchmark (S&P Target Risk Growth Index) that was up 19.20% in 2019. Acorns “Moderate” (+20.97%), TIAA “Moderate” (+20.55%) and Axos “60% Stock” (+20.42%) held the top three spots on the taxable side, with JP Morgan’s “Moderate” portfolio up just 7.34%.
In the Income category (max. 45% equity) the average robo-advisor performance for taxable “just invest” portfolios was up 14.24%. Only ten out of the category’s 31 portfolios outperformed the benchmark (S&P Target Risk Moderate Index) that was up 15.7%. Sogo Marketriders “Moderate Income – Starter” was the category winner (+18.24%), followed by TIAA “Moderately Conservative” (+17.95%) and Acorns “Moderately Conservative” (+17.73%). The bottom three portfolios returned 8% or less to investors.
The Conservative category (max. equity 30%) was the only category where half of the ranked portfolios outperformed the average of 9.34% (“just invest”) and 10.25% (“retirement”). Again, Sogo Marketriders, TIAA and Wealthfront led with returns over 14%. At the bottom, Ellevest “An Emergency Fund” returned 0% while Acorns “Conservative” had a performance of 0.47%.
“2019 was a record-breaking year for the stock market, but most robo-advisors significantly lagged their benchmarks and a number of the largest firms including JP Morgan, Charles Schwab and Morgan Stanley had a challenging year,” said Roi Y. Tavor, Co-founder and CEO of Nummo. “While past performance is just one variable to consider, our research shows that it is not always readily available. Now that this industry segment is so large, we feel that greater transparency is needed for investors to make more informed decisions.”
This release is not intended to provide legal, tax or financial advice. It is strictly educational in nature and is provided with the understanding that Nummo is not engaged in rendering accounting, investment, tax, legal, or other professional services. Nummo makes no representations, warranties, or guarantees, express or implied, regarding the results or savings that may be obtained through your use of any of the reviewed robo-advisor services. Investment markets have inherent risks and historic performance does not assure future results. The release is intended only to assist you in your banking decision-making and financial planning and management, and is provided without complete knowledge of your financial situation. If legal, financial, or other professional advice is required, the services of a competent professional person should be sought.
Nummo is a personal financial management platform that empowers individuals to live better lives by helping them manage, maintain and improve their financial health. The company does that through its website nummo.com and an app with a suite of features that allow them to consolidate accounts and manage their money in a completely transparent and conflict-free environment. Founded in 2016, Nummo is headquartered in Zurich, Switzerland. For more information, visit www.nummo.com.
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