Which Robo-Advisors Are Best? To Find Out, an RIA Invests in Them

Condor Capital, a New Jersey-based RIA, invested in about a dozen robo-advisors to measure their comparable performance

Advisors wanting to know which robo-advisors are their toughest competition may want to consider Condor Capital Management’s research on the subject. The New Jersey-based RIA just launched the first in a series of quarterly reports on the portfolio performance of various robo-advisors' taxable and nontaxable accounts after fees. Also included are data about fees and account minimums.

The data so far is limited, covering at most the first three quarters of this year, but it can give advisors some insight into the various robo offerings.  

Condor Capital, which has over $846 million in assets under management according to its latest Form ADV, employed a rather unique approach to its research, investing its own funds in various robo-advisors using a 60/40 equity/bond split for taxable accounts and as close as possible to 100% allocation to stocks for tax-free IRA accounts.

“Robos are a black box,” explains Ken Schapiro, founder and president of Condor Capital Management. “The only way to do this is from back end.”

According to its report, Condor Capital used a “similar baseline allocation across the portfolios,” which allowed it to measure performance and maintain as much as possible an equal allocation among funds.

Altogether Condor invested in 12 different robo-advisors and 13 different portfolios for taxable accounts (TradeKing had two portfolios: a core and a momentum portfolio), but only nine portfolios for the full three quarters (Two E-Trade portfolios and FutureAdvisor weren’t added until the third quarter; Fidelity Go was mentioned but not included in the data).

It also tracked performance of six robo-advisors for IRA accounts but none for the first quarter.  At most it had data for just three robos for the second and third quarters.

By the end of September, Condor Capital had $210,000 invested in taxable accounts and $45,000 in IRA accounts with robo-advisors.

Looking strictly at the relative performance of the nine taxable portfolios followed for the first three quarters of the year, after fees, Schwab emerged as the leader, returning 10.2%, followed by SigFig, up 9.3% and Personal Capital, up 9.1%.

Schwab also led among the taxable equities-only portfolio, up 12.54%, followed by Acorns, up 11.1% and Personal Capital, up 9.74%. In the fixed income category, SigFig led in performance, gaining 9.81% through the third quarter, followed by Schwab, up 9.35%, and WiseBanyan, up 7.55%.

All the portfolios were comprised of ETFs though Schwab also maintained a small cash allocation throughout — under 10%.

Condor Capital’s report highlights several factors that contributed to the top robo performers.

  • For Schwab, allocations to gold, emerging market stocks and U.S. small-cap — the latter comprising nearly 10% of the portfolio — helped its equity portfolio performance while an international bond allocation boosted its fixed income portfolio.
  • SigFig’s taxable portfolio benefited from an overweight to emerging market stocks and allocation to emerging market sovereign debt.
  • Personal Capital’s taxable portfolio benefited from holdings of Vanguard Sector ETFs as well as gold and emerging market equities. Its bond portfolio was boosted by medium term investment grade, high yield and international debt ETF holdings, all returning double-digit gains.

The taxable portfolios of all three robos suffered from allocations to developed markets international equities.

Condor Capital’s data on the performance of robo-advisor IRA accounts was limited, so it’s difficult to draw any conclusions. At most the firm had data for only two quarters – the second and third – for three robos: SigFig, placing first, followed by Schwab and WiseBanyan.

Now Condor Capital will be watching the performance of these robo-advisor portfolios in the fourth quarter and beyond. “We haven’t seen a large amount of trading and rebalancing among different asset classes now,” says Michael Walliser, Condor Capital’s executive vice president for compliance and investment research, noting that firms want to avoid short-term capital gains before year-end. “It will be interesting to see what happens after Dec. 31.”

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