Fundscape has launched a year-long experiment to compare the performance of both advised and non-advised active and passive investment solutions.
The 'Great British Wealth Off' will run until 1 February 2018 and could continue for another year if there is sufficient demand. Five investments were selected for the competition: one robo‐adviser (Moneyfarm), one active fund of funds (Architas MA Active Progressive), two active multi‐asset funds (MI Hawksmoor Vanbrugh and Royal London Sustainable World), and one passive fund of funds (Vanguard LifeStrategy 80% equity).
£300 has been invested in each fund, with only funds with the same Morningstar SRRI rating of four out of seven selected. The Moneyfarm profile chosen was 'pioneering investor' with a medium risk level.
GBi² managing director Graham Bentley also created an active and passive control portfolio, both of which generated Morningstar ratings of 'moderate risk'.
Apart from the Moneyfarm portfolio, each investment was replicated with different charging structures - a 0.95% for advice fee plus advised platform fee, 0.25% for the non‐advised platform fee (in this case the AJBell Youinvest platform) and no charge for investing directly with the fund manager. Clean share classes were used except for direct, where the experiment used the charge offered by each fund manager under those circumstances.
‘Levelling the playing field'
Fundscape chief executive and Comparetheplatform.com founder Bella Caridade‐Ferreira (pictured) said: "The press is awash with stories about the pros and cons of different investment strategies. The often wild claims give investors unrealistic ideas about long‐term investments, making it difficult to make informed choices.
She continued: "We want to help investors understand how the investments work through different channels and monitor the impact of fees. So it's really about levelling the playing field."
Asked for her thoughts on potential winners and losers, Caridade‐Ferreira said she wished to remain impartial and was keeping an open mind, but observed: "It is interesting that, in the two weeks the experiment has been running, the only fund to be in positive territory is one of the active multi-asset funds, MI Hawksmoor Vanbrugh."
Bentley said gauging cost for investors was also a key reason for his involvement in the experiment, adding: "Bella and I have both worked on ‘gatekeeper' fund research studies and so, around this question of efficacy, we wanted to test the various options for investors and the total cost of ownership."
Bentley, who writes a regular column for Professional Adviser, added: "I think advisers place a lot of emphasis on asset allocation based on market predictions but they forget that risk can be measured - uncertainty cannot."
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