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Performance of robotIQ and other German robo advisors

Persephone Team, June 2019

After a four month period of hope and growth, market participants seem to have lost confidence that a settlement of the trade and tariff conflicts could happen anytime soon. Similarly, EU and UK appear to veer away from a Brexit-deal rather than getting closer to an agreement. This caused – fears of an upcoming global recession returned and let markets go into reverse. E.g., developed economies’ equity indices declined about 5% in May, with Japan’s Nikkei holding the red lantern with realizing losses of 8%.

Consequently, it does not come as a surprise that all robo-advisors partaking in the official Brokervergleich test setup have experienced negative performances in May 2019, ranging from -0.8 to -3%. On a closer look at the ranking, however, an interesting observation can be made: compared to previous performance comparisons, the ranking order in May seems to have reversed for many robo-advisors. Offerings such as “Ginmon” or “fintego”, in previous months consistently in the top 5,  are now found on the lower tail of the list. The reason for this, however, remains unclear. Clearly, we will follow up on this subject in the light of further developments in the next months.

Below figure shows Brokervergleich’s current publication of the robo-advisor test results for May, in which we have incorporated the performances of the various robotIQ portfolios [1][2][3].

robotIQ-may

Please note that each year in May Brokervergleich starts a new yearly test-cycle. On this occasion the list of partaking robo-advisors is adjusted and in 2019 five offerings, namely PIXIT (Targo Bank), Zeedin, wewest, Warburg and WMD Capital have been additionally admitted. Vaamo and Prospery, on the other hand seem to have dropped out and do not appear on this month’s comparison.

Regarding the robotIQ portfolios, we observe extraordinary performance results across the board. This might be due to two main reasons:

  • First, Persephone’s ALCO committee has not revised its conservative market view from November 2018, even though markets kept growing from January throughout April. With the ALCO view having a decisive influence on the allocation of the robotIQ portfolios, the more conservative setup might have paid off in May when markets got under pressure.
  • Secondly, robotIQ portfolios with risk levels of 15% VaR and above may invest small parts of their volume in Bitcoin. Starting with the 15% VaR portfolio, investments in Bitcoin are limited to 3%. With higher VaR levels the maximum allocation limits increase up to 8% for portfolios with risklevels of 20% or more.

The following chart highlights the surge of BTC/EUR in May, a rise of no less than 60% in just one month. Clearly, such a movement affects the total portfolio value even if the actual allocation in Bitcoin is small. While it also adds to daily volatility, the longterm investment seems to have paid off return-wise.

grafik2

Background:

Persephone operates a quantitative finance platform robotIQ© which runs one version of its digital asset management solutions in an operational fashion to manage a range of retail portfolios. These managed portfolios are published at wikifolio.com for an objective and transparent record [5]. They are compared to several robo-advice offerings in the German market, which are tested by the comparison website brokervergleich.de [1].

[1] Source: Brokervergleich, Franke-Media.net (Leipzig), please see Brokervergleich Testverfahren for a detailed description of the test approach
[2] Performance of robo-advisory offerings calculated by Brokervergleich (see above), all calculations for robotIQ© portfolios based on data from Wikifolio, Ariva, Lang & Schwarz and Persephone-own calculations
[3] robotIQ© portfolios in solid color (VaR 13, 16, 19) have risk characteristics that are similar to the ones of other robo-advice portfolios Brokervergleich has chosen for comparison
[4] Please see separate article „Signals for an upcoming recession?

[5] Persephone robotIQ© portfolios at www.wikifolio.com

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