Robo-advisors: Digital asset managers you need to know

Robo-advisors: Digital asset managers you need to know


 

Investing in the stock market without having to worry about it all the time? 


That's exactly what "robo-advisors" - digital asset managers - promise. The user enters his or her own preferences, such as investment horizon or risk tolerance, and then the robot scans the market and selects suitable funds, stocks and passive index funds (ETFs) out of order.


But investment assistants are not digital analysts who devise complex investment strategies. They generally use simple online queries to assess their clients' needs and recommend various asset classes and financial products on that basis. Portfolios are then generally static and designed by humans - although they are regularly and automatically readjusted.

 


Active and passive robo-advisors


A fundamental distinction can be made between active and passive robo-advisors. Active robo-advisors pay closer attention to stock market trends and reallocate assets accordingly, which can be an advantage, especially in times of stock market uncertainty. Passive robos stick to the defined strategy, reallocating money only to maintain the desired weighting of asset classes. They are therefore better suited to long-term investments and savings. In recent years, the issue of sustainability has also played a more important role for robots.

 


Robots still have a trust problem


The idea of automated investment is not new: the first robo-advisors appeared on the market ten years ago. However, they have yet to really catch on. In a recent survey conducted by robo-advisors Cominvest and Quirion, 39% of respondents were unfamiliar with the term, and only 28% knew what robo-advisors do. According to the survey, the most important arguments in favor of a robo-advisor are the high degree of self-determination, time savings and simplicity of investment, even without prior knowledge. The most important argument against it: 52% of those questioned prefer to manage their investments themselves in these times of crisis.


If you'd like to test a robot, you can consult comparison portals such as Biallo or the latest performance tests carried out by Capital or Stiftung Warentest. However, Stiftung Warentest advises novice investors against investing in a robot. You should already have some knowledge of funds and ETFs to be able to decide whether the investment recommendations are appropriate.

 


Consider costs carefully


Compared to a traditional asset manager, robo-advisors are of course considerably cheaper. Before opting for a robo-advisor, however, you should take a close look at all the costs involved, as they naturally reduce returns. Costs include not only management fees, but also product costs such as ETFs, as well as deposit and withdrawal fees.


Many providers also modulate fees according to the size of the investment: the more you invest, the cheaper it gets. For small amounts, it's not worth investing via Robo. Weltsparen, for example, offers an inexpensive robot with annual fees of 0.48% of invested assets. The average fee is between 0.5% and 1.0%.

 


Which robot is right for you?


Scalable Capital: This is the best-known robo-advisor on the market. Scalable pursues a passive investment strategy with active risk management. Money flows into ETFs and ETCs (exchange-traded commodities) within an asset class. The offer is varied: customers can invest their money in equities, government bonds, corporate bonds, commodities and gold. It is also possible to invest in sustainable securities. Users' loss tolerance is differentiated into 23 risk classes. Annual fees are 0.75%, plus ETF costs. If you invest more than €100,000, you pay an annual fee of only 0.69%, plus ETF costs. For deposits over 500,000, the annual fee even drops to 0.49%.

 


Robin


This is Deutsche Bank's robo-advisor. Investors' money is invested in ETFs with the aim of achieving broad diversification and minimizing the risk of loss. The investment strategy is not purely passive: the portfolio is regularly adjusted on the basis of Deutsche Bank's market analyses. This expertise does not come cheap: the annual fee of 0.75% is average, and ETFs entail additional costs.

 


Smavesto


Robo comes from Sparkasse Bremen and offers savings plans starting from 50 euros or a one-off investment from 1,000 euros. Investments are made in ETFs and ETCs, which rules out speculation on food prices. Smavesto also offers an active investment strategy. Clients are divided into different risk classes, and share allocation is adjusted according to market conditions and willingness to accept losses. Sustainability criteria can also be included. Smavesto is also relatively expensive: annual fees amount to 1.0% per annum. Additional fees, such as the ETF, are charged on top of this.


 

Solidvest


This robo-advisor is provided by asset management company DJE Kapital and recently scored well in tests by Capital and Stiftung Warentest. Unlike most others, Solidvest does not invest in funds or index funds, but in stocks and bonds. The portfolio managers select the portfolio on the basis of over 500 company interviews conducted by DJE Kapital analysts - so the strategy is much more "artificial" than that of other robos. Fees are based on investment volume: for an investment volume of €10,000 to €100,000, 0.9% per annum is payable, plus a 10% profit share. For investment volumes over €100,000, the annual fee is 0.8%.

 


Quirion


Quirion is an old hand among robo-advisors, having been on the market since 2013. You can invest from as little as 25 euros a month or, with the basic Quirion Digital tariff, with no minimum investment or minimum term, and you can also invest 10,000 euros free of charge for one year. A special feature of Quirion is the foresight-oriented portfolios. With age, the portfolio automatically becomes less risky, but the return is of course lower. Investments are made in ETFs and ETCs, which must also meet social, ethical and ecological criteria. With an annual fee of 0.48%, Quirion's basic fee is very low, with the comfort account at 0.68% and the premium account at 0.88%.