Solactive revisits robo-adviser study and finds that investors should look beyond costs when choosing
Index provider Solactive has published a report on robo-advisers titled Robo-Advisory: A Closer Look at the Engine Room Through Time.
The new publication is a follow-up to the previous Robo Advisory: A Closer Look at the Engine Room released in November, studying the digital portfolios of three hypothetical investors - Bart S., Lisa S., Abraham S. – as recommended by a sample of German and US robo-advisers.
This report shows the key findings after more than six months of investigation. Findings include: Target portfolio weights assigned to specific risk profiles change from month to month; Robo-advisers keep fine-tuning their investment strategies with frequent ETF changes; Robo-advisers have shown delayed market reactions to the late-January rising market volatility; US robo-advisers continue to invest more aggressively than their German peers; Differences in terms of cost and home bias between German and US robo-advisers persist.
In addition, the paper introduces an updated version of a simulated multi-asset class model that was first developed in the November report, as a proxy for robo-advisers’ performance through time.
Timo Pfeiffer, Head of Research at Solactive, says: “Our series of reports on robo-advisers started off with the idea of offering an independent perspective on the performance and portfolios invested by robo-advisers. Based on our observations, I want to stress the importance of looking beyond costs when picking a robo-adviser, something that I also emphasised back in November. The market moves for January and February confirm this, since not all providers responded to the changing market environment in a timely manner.”