Simple, cheaper, digital. This is why robo-advisors are attracting more and more private investors to invest their money rather than seeing how it stagnates at the savings account with interest rates close to zero. But how did the best robo advisors in Germany really perform during the pandemic? Let’s have a closer look.
FondsConsult AG, an independent funds research, analysed 23 out of 30 robo-advisors in Germany for the last two years until March 31st 2020.
Robo-advisories have the purpose to automate the processes and enable investing to the masses while trying to keep the costs low, since savings accounts aren’t yielding any interests at the moment. Consequently, the majority of the robo-advisors invest in cheap exchange-traded funds, ETFs. According to Oliver Wyman; the cumulative asset under management (AUM) is being estimated between five to seven billion euro.
However, during a crisis risk management of the providers make the biggest difference. Most robo-advisors manage their risk systematically using dynamic models with volatility metrics. But even static models with regular rebalancing to initial set asset allocation weren’t bullet proof.
Top of The Ranks
Nevertheless, two robo-advisors stand out from the masses in the last two years – Solidvest and Minveo, with an actively managed strategy of robo-advisories Solidvest and Minveo, which is driven by a 25 factor learning algorithm. Both have already begun to reduce risk in the “overbought stock market”.
Since the end of January, based on a risk score for each country, Minveo has gradually been selling shares first in emerging markets, later followed by the western world. Bonds were then sold in mid-March, with resulting high cash positions.
Meanwhile, Solidvest sold at the right time affected business by the corona virus and invested heavily in tech. The balanced strategy of Minveo and Solidvest gained over the last two years 8,5% and respectively approximately 6% with low volatilities. Whereas competitors had a negative performance.