INVESTING FOR THE 21ST CENTURY

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  • Fiscal Frontiers

ROBO REVIEW: 2019 YTD

MAY 15, 2019 UPDATE

(Disclaimer at the end)



INTRODUCTION


May 2019 finally saw a bit of a pull back in the roaring bull markets that came with the first three months of the year. Whether it is the bear market many people are foretelling, or just a momentary reset remains to be seen, but it’ll be easy to track the performance of our ETFs versus our robots if things start to get super volatile. As of May 10th, our robo-advisors were up a total of 12.11%, from a combined $2,000.00 to $2,242.22, as follows:

  1. Questwealth: $1,132.45

  2. WealthSimple: $1,109.77

As the chart below shows, from our last post (April 5th), our account went up and then came back down. As of April 5th, our accounts were at $2,249.81, and they fell a relatively scant $7.49, or 0.34%.

The Questwealth account has led the WealthSimple account since January 17th. However, looking at the two accounts, they have moved in virtual lock step since the beginning of the year, moving up and down together consistently.

If you are interested in investing with Questwealth, use our referral code (baxg1ibj) to get your first month of management free!


Before we compare our WealthSimple and Questwealth accounts directly to the ETFs we have chosen for comparison, we should discuss those ETFs individually.

OUR ETFS


We have outlined Our Control Group for this blog, as three Vanguard ETFs. As a quick recap, we are keeping track of:


  1. The Vanguard S&P 500 ETF (VOO): which is designed to track the S&P 500, the most commonly cited benchmark for stock market investors.

  2. The Vanguard Total World Stock ETF (VT): which is designed to track the global stock markets as a whole, with holdings in 8,109 different stocks and 42.1% of the market value being derived from outside North America.

  3. The Vanguard Short-Term Government Bond ETF (VGSH): which is our “risk free” rate of return, obtained by having the fund track the Bloomberg Barclays US Treasury 1–3 Year Bond Index, which includes fixed income securities issued by the US Treasury with maturities between 1 to 3 years.

We’ve done the math such that it is as if we had made a $1,000 investment in each of the above ETFs on January 1, 2019. The value of any dividends paid on the ETFs is invested right back into the ETF. On May 10, 2019, the value of an investment in each of these ETFs looked like this:

The trends we’ve been seeing through 2019 continued, with the VOO and VT ETFs moving together, but this time coming down in May. Alternatively, as things started to get volatile, VGSH, our “risk free” rate of return investment actually saw a pretty steady (though relatively modest) climb.


ROBOTS VS. ETFS


The next table compares our robo accounts to our ETF control group. Note that, if you just want to look at it and get the gist of what happened, then the robo-investments have remained with solid lines and the ETFs are shown again with dashed lines:

And the results show that, at least for the first four months of 2019, with markets rising and then falling, our robots tracked the general market tracking ETFs. That said, our Questrade account has, by and large, caught up to the World Market ETF. As will be shown below, they are separated by a mere $3.33.


In our last post, we outlined that we weren’t super surprised that the general markets were outstripping the robots, since even the most aggressive robots will not be 100% aggressive and will have a certain percentage of their assets in cash and conservative assets (e.g. bonds). And, looking at the comparison now, where markets took a bit of a hit and the gap between robots and ETFs closed, it appears our faith has been rewarded, at least in these early days of valuatility.


Whether the decline we’ve seen in May is the start of a full-blown correction, like some people keep suggesting is on the horizon, or whether it is just a precursor to one of the routine 5-10% drops that should occur every 1-2 years (but which we haven’t seen since 2011), has yet to be seen.


Each investment started at $1,000 on January 1, 2019, and the value of each of these on April 5, 2019, ranked best to worst, was as follows:

CONCLUSION


We hope to add more robo-investors over the coming months and years. If you have a particular robot you think we should be looking at, then let us know in the comments, on Twitter @fiscalfrontiers or via email at fiscalfrontiers@gmail.com. Alternatively, if you have an ETF that you think would be a good one to track, then let us know via any of those channels, too.


Next week, look for our review of how our 2019 cryptocurrency investing has been going!


We at Fiscal Frontiers are not investment advisers and our only goal is to report to you on the performance of investments we have made so that you can consider our experience along with all the other information available to make an informed decision on what is best for you. Investing in the stock market is inherently risky and all of a particular investment could be lost.

 
 

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