Robo advisor portfolios positioned for rising inflation and lower interest-rate exposure performed well in the first six months of 2022, according to the latest Robo Report, which Condor Capital released Monday. These strong performers, though, tended to differ from the best robo advisors over longer periods.
“This has proven to be a year that rewarded those with assets allocated to the theme of rising inflation, and those assets that reduced their exposure to a rise in interest rates. Some robo advisors proved to be especially resilient, while others were exceptionally vulnerable,” according to Ken Schapiro, Robo Report publisher and founder of Condor Capital Wealth Management.
In general, robo advisors with higher allocations in value stocks outperformed peers in the year’s first half, while growth-oriented robo advisors performed better longer term, the report states.
“When unpacking the drivers, it was both the allocation to value stocks and specific inflation-protection-themed assets,” explained David Goldstone, manager of investment research, Condor Capital Wealth Management, in the report.
“The most prudent investment one may make is to combine growth-oriented robos with those that have higher allocations to value stocks and inflationary assets,” Goldstone said.
The Robo Report, which tracks 58 accounts at 33 providers, started opening accounts at robo advisors in 2015 with the aim of bringing “transparency to the industry” about these investment vehicles.
The Robo Ranking measures performance and expenses and numerous qualitative metrics related to financial planning, client experience, product features, access to live advisors, account minimums, transparency and conflicts of interest.
The Wealthfront portfolio tracked by the Robo Report — a legacy account dating to 2016 — led robo performers in the first half of 2022, followed by the Morgan Stanley Inflation-Conscious-themed advisor and Condor’s Personal Capital portfolio.
Also, the best robo advisors over a three-year and five-year period differed from those that performed the best in 2022, with one key exception — Wealthfront — which outperformed growth-oriented robo advisors in all periods due to its 10% allocation to energy, the report said.
(New accounts opened at Wealthfront don’t have this natural resources allocation, according to the Robo Report, which explained: It “appears that our main account is in a legacy portfolio model.” The team plans to start publishing the performance of both the legacy model and another Wealthfront account that it tracks.)
See the top-ranked robo advisors for the second quarter of 2022 in the gallery above. The performance period used for these rankings is for the past three years — from June 30, 2019, to June 30, 2022 — according to Goldstone.