All of my investments are down!
Perhaps this does not come as a surprise to anyone considering the bouts of volatility we have been experiencing. It has made me wonder though, is a robo-adviser the best place for my money to be in if more volatility is to come?
A number of factors contribute to my thinking on this: communication, access and asset allocation changes.
In terms of communication, Wealthsimple, Nutmeg and Moneyfarm get top marks. The volatility in October was surely worrying for many investors so it was great to see these three companies post updates addressing this on their homepages.
Wealthify also discussed what was happening in October in its blog, but now that it has written three more articles, the one on markets has been pushed down on the homepage. I think it might be time for another update.
However, Moola’s latest ‘knowledge’ article is the September market commentary, discussing how ‘global markets appear on broadly positive trend for the year so far’. Need I say more?
In terms of access, there is not much difference between the services. They all have a little chat box in the corner, a number to call and the option to send a secure message. I should mention that Moola still does not have a mobile app.
In terms of asset allocation changes, it is also good to see that the companies that have communicated about the volatility have also assured me that they are not making rash decisions or trying to ‘time the market’. As a financial journalist I probably have more information than most people investing in these services. For them, I can understand that a good explanation of the situation would be helpful and how it is important to try and calm less knowledgeable investors’ nerves.
Past performance not a guide…
When the market wobbled in February, my portfolios all took a hit, and similarly this happened again in October.
Right after that February dip, almost all my investments started recovering and were in positive territory by the time March rolled around.
While past performance is no indication, it will be interesting to see if the portfolios can recoup their losses once again by the end of the year.
It is great to immediately see an update on the market volatility when I log in to Nutmeg. The piece, written by chief investment officer Shaun Port and director of investment strategy Brad Holland covers three important areas: how the period of volatility began, a view on UK stocks and long term considerations around market volatility, as well as how much attention investors should pay to it.
Port stated: ‘We think this sell-off should prove temporary, and we maintain our view that a global recession is unlikely in the near term.’
Total Invested: £2,100
All time performance: -3.09% (29 October)
Portfolio risk: 6/10
The last update I received from Moola was at the end of September. There has been no communication through the market volatility this month, even though my portfolio is down. It still does not show me a percentage decrease or increase in terms of performance either, which is disappointing. I am wondering, now that it has been acquired, will the service improve or will it just disappear?
Total invested: £1,800
All time performance: NO IDEA (Moola does not share percentage performance figure, I am not sure how much it is down. The value of the portfolio is currently £1,771.)
Risk profile: Cautious
Moneyfarm also put a little box on the homepage to answer ‘common questions about market volatility’. There is a written statement from head of UK investment consultants Will Hedden, while clients can also book a call.
It is also good to get answers to questions like: does high volatility lead to a rebalance? To which the answer is: ‘Volatility itself doesn’t trigger the rebalancing process. Our asset allocation team monitors the markets and the global backdrop closely to understand how the geopolitical and macroeconomic scenario can affect our portfolios.
‘Although the latest rebalance coincides with a recent bout of volatility, our decisions were based on changing fundamentals, not movements on the market.’
All time performance: -3.45% (29 October)
Total invested: £1,850
Investor profile: Adventurous
Wealthify had an interesting market update posted on 17 October, addressing a number of issues from inflation to trade wars and Brexit. Since this is a service where there are no face-to-face meetings, it is good to get an insight into how the investment team is thinking and viewing some of the topics that have dominated headlines.
Investment manager Andrew Amy concludes his piece by saying: ‘We remain positive about the economic outlook, and the case for riding out the current market downturn and remaining invested over the long-term.’
Total invested: £1,800
All time performance: -1.20% (29 October)
Investment style: Confident
Clear and concise. I imagine that for anyone who is not constantly immersed in news about the markets and how it all works, this is very important when your investment manager is giving you an update. That’s what I like about Wealthsimple. It is accessible.
As an example, here is an extract from its latest update: ‘No one can predict what will happen in the short term. But over the long term stock markets trend upward… To put these fluctuations in context, on average, the S&P 500 experiences three declines of 5% or more each year. This is the second one we’ve had in 2018. What it all comes down to — and you’ve heard this from us before — is the best thing to do is to stick to your plan.’
Total invested: £1,250
All time performance: -3.6% (29 October)
Investment style: Growth