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Portfolio > Portfolio Construction

Vanguard Is Way Ahead in the Robo Race

By Bernice Napach

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Vanguard is winning the competition among robo-advisors. The AUM of Personal Advisor Services, its robo platform, at the end of the first half was $83 billion, more than four times the AUM of its closest rival, Schwab Intelligent Portfolios, and almost five times the assets at inception in March 2015.

(Related: Schwab’s Robo-Related Assets Surge to $19.4B in Q2)

In addition, a sample 60/40 taxable portfolio in Personal Advisor Services outperformed 16 other competitors in the first half, according to the latest Robo Report from Ken Schapiro, the founder and president of Condor Capital Management, and Backend Benchmarking.

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

The Vanguard portfolio gained 7.86%, followed closely by portfolios from TD Ameritrade (up 7.78%) and SigFig (up 7.67%) for the first half. The sample portfolio assumes the investor is in the highest federal tax bracket.

(Related: Who Were the Best Robo-Advisors in Q1?)

Vanguard’s robo platform differs from its competition in several other ways: Its minimum account size is $50,000 (only Personal Capital has a higher one, at $100,000); its onboarding of new clients requires a conversation with a live financial planner, but it doesn’t offer automated tax loss harvesting, which is a common feature among many other robos.

Vanguard’s Personal Advisor Services charges an annual 0.30% on the first $5 million, in line with that of many other robos, including E-Trade, TD Ameritrade, Fidelity Go and Betterment, but it’s more expensive than no-fee platforms like Schwab’s and SigFig’s (for the first $10,000).

The latest Robo Report, which is based on actual accounts opened by Schapiro to get a real-life, real-time understanding about how different robos service clients and evolve, also highlighted the growth of the industry in the U.S. and expansion beyond the U.S., into Canada, the U.K. and Western Europe.

In late June BlackRock, which bought FutureAdvisor in 2015 to serve U.S. clients, acquired a significant stake in Scalable Capital, which has clients throughout Western Europe. The first half also saw the debut of Fundrise, a robo focusing exclusively on real estate.

The second half is expected to include introductions of robos from Morgan Stanley, Cetera and Wells Fargo, according to the Robo Report.

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