Two Days in August

The anticipated wide swings in the last two days presented me with the opportunity to compare the two robo advisor’s performance. Later this year, I am going to decide between Betterment and Schwab’s Intelligent Portfolios for some of my IRA funds. So I was quite interested in how they performed over the last two days, and since the first of August.

Unfortunately, I decided to wait until the end of the day to do the analysis. The large gains earlier in the day disappeared. Hopefully sometime tomorrow will give me an opportunity to look at an increasing market. None the less, the S&P 500 index dropped 1.35% today and is down 10.01% this month.

Betterment actually was up 0.23% today and is down 5.78% for the month. There are 11 funds in Betterment and 3 finished up today, enough to make the total positive. These were emerging market funds and the FTSE developed market ETF.

Schwab dropped 0.33% today and is down 7.34% in August. There are 17 funds in this account, 9 had gains today but were more than offset by losses on large cap U.S. funds, REITs, and gold.

It’s interesting that Betterment has outperformed Schwab recently because early on Schwab was the better performer.

I think I’m going to follow these daily for a while (I continue to monitor these weekly). If I update the blog again, I’ll post on Twitter at @billlanke.

Tough Week

We’ve just finished a tough week on the market, so I thought I’d take a look at the test accounts to see if there was protection in any of them. The S&P 500 Index dropped 5.8%, more than double any week since I started this in January. The Folio Investing account dropped 7.0%. This is not unexpected because this account picks individual stocks in RTGs with very high recent performance. High reward equals high risk.

Betterment and Schwab Intelligent Portfolios are designed to spread the risk at the cost of lower rewards. This has proven true in up and down weeks, less extreme swings. And the same was true this week, both dropped, 3.3% for Betterment and 3.7% for Schwab Intelligent Portfolios. These are obviously good choices to dampen the pendulum swings.

Of course, Lending Club has practically no swings. It just moves up every week. Last week’s gain was 0.15%. It moves up at a slow and steady pace. The account is up about 10% this year, even without being fully invested (only about 80%).

If I update the blog again, I’ll post on Twitter at @billlanke.

Accounts in early August

It’s been 6 weeks since I last posted an update on the test accounts. During that period of time the market has been relatively flat. The S&P 500 index has been up and down almost on a weekly basis and is only up 0.1%. Three of the 4 accounts I’ve been tracking are up more than the S&P 500.

Betterment has gained 0.36% during the 6 weeks. The Folio Investing account grew 0.33%.  Overall though the Folio Investing account has outperformed the Betterment account The Folio Investing account has 1.6% more cash than has been deposited while Betterment is up 1.1%.

Lending Club is up 0.30% in the last 5 weeks and has 1.4% more than deposited. Lending Club’s weekly percentage returns have been down, but that’s only because the amount invested was increased significantly. We had maxed out at 400 notes before we added cash to the account. We now have 1165 notes active, but still have over 200 currently being reviewed. We’re spacing out the acquisition of notes and won’t max out to a bit over 2000 for another month or two. This is keeping the weekly increases down.

The real news is in the Schwab Intelligent Portfolio account. It has dropped 1.9% in the last 6 weeks and currently has 1.1% less cash in the account than was invested. Very disappointing. Looking at the holdings, there are several major losers. The biggest is emerging market stocks and bonds. Precious metals has also fallen a fair amount. These funds have over 20% of the total allocations Betterment only allocates about 10% to these funds. So what does this mean long term? I don’t know.

I’ll keep following these accounts and will document the results occasionally. Follow me on Twitter @billlanke to know when this occurs.

Another test account update

It’s been about a month since I’ve reported on the test accounts. I did add cash to the remaining accounts and have been tracking them weekly for my own purposes. Because the cash hit at different times, tracking percentage changes became more complex. But since they all have had identical amounts invested, simply looking at the totals becomes the best ballpark measure of performance.  So I thought I’d document some of my current observations.

Currently, Folio Investing has the highest balance, hence the best performance of the three market related accounts. I added one more Ready to Go portfolio (this one contains large companies based in Japan). This gave me 5 RTG portfolios and one based on my allocations. In the last three weeks this account has grown 0.98% (compared to 0.12% for the S&P 500 index). All but one of the six portfolios have grown in the past three weeks. The Biotechnology RTG is the clear winner accounting for two-thirds of the account growth.

Betterment has grown 0.30% in the past three weeks. Part of the reason its increase was smaller than Folio Investing was that the additional cash was credited to Betterment faster than the others and it grew more in the first partial week than the other accounts, leading to smaller growth in the subsequent three weeks.

Schwab Intelligent Portfolios has had the worst performance, dropping 0.18% over the last three weeks. That’s particularly disappointing since they had been achieving the best overall performance before the funds were added. They did re-balance the fund with the additional money, but there has been no other re-balancing since the account was opened. This is contrasted to Betterment who attempt to re-balance with every dividend received, no matter how small. Mine and other studies have indicated the frequent re-balancing isn’t particularly useful, but who knows.

Lending Club has grown 0.9% over the last three weeks. Its growth is slow but steady. I have not had any bad debts yet, but about 1% of my notes are late and could be headed toward default. So far this account has an earnings rate of about 15% per year. If the late notes I have go bad the annual return would fall to about 9%. This account is an IRA filtered through a custodian (SDIRA). I’ve been trying to add funds via a transfer from Fidelity for a month. Finally, this week, I had Fidelity stop the initial check and wire the funds. SDIRA has had the transfer for a couple of days and hasn’t transferred the funds to Lending Club yet. Once there, it will be at least a month before the first earnings can be achieved from notes purchased with the new funds. And it will take a long time to convert the new funds to notes. I guess patience will be a virtue here.

I don’t plan on updating this blog regularly, but will post on Twitter when I do, @billlanke.