a growing line of financial services that includes stock trading for DIY investors, banking and, recently, mortgages. But Wealthsimple’s original robo-advice business, which it calls managed portfolios, does not impress with its investment results.
Wealthsimple chief investment officer Ben Reeves says the company’s portfolios are designed to provide a trade-off: Lagging performance at times like now, when North American stocks are doing very well, in exchange for steady returns that blunt stock market extremes. Justwealth Financial, a top-performing competitor to Wealthsimple, delivered 9.1 per cent on an average annual basis through its comparable Global High Growth Portfolio. Another competitor, Questwealth Portfolios, made 8.5 per cent in its growth portfolio. A pair of all-in-one ETFs, the iShares Core Growth ETF Portfolio made 9.2 per cent and 8.8 per cent, respectively.
Investors must assess managed portfolio returns over the past five years because none of the players have been around long enough to publish more substantive 10-year results. But Mr. Reeves said five-year returns can mislead investors with numbers reflecting past trends that will fade as time passes. He said it’s more important to pick a portfolio that manages risk well through diversification.
“When the U.S. and Canada lead, you’re going to lag,” Mr. Reeves said. “And then when other regions lead, you might do better. That’s the nature of trying to be more consistent – that’s really the trade-off.”