Investing

Wealthsimple Robot adviser Vs. Index ETF

  • Last Updated:
  • Apr 16th, 2021 6:07 pm
[OP]
Newbie
Mar 5, 2021
24 posts
3 upvotes

Wealthsimple Robot adviser Vs. Index ETF

Does Wealthsimple Robot adviser growth portfolio beat typical index ETF like S&P 500? Can anyone with Wealthsimple growth portfolio share their annual performances?
24 replies
Newbie
Dec 27, 2020
36 posts
71 upvotes
You can't really compare the two. Wealthsimple growth will be 75/25 - 90/10 equity/fixed income allocation and is globally diversified with multiple ETFs. S&P 500 is more concentrated and will be more volatile in comparison. No one knows if this will lead to bigger gains in the future.

Also keep in mind Wealthsimple invest is semi actively managed. Last year they adjusted their portfolios by adding a minimum volatility ETF along with adding gold to their fixed income portion.
Last edited by department50 on Apr 14th, 2021 4:55 pm, edited 1 time in total.
Member
Oct 29, 2014
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149 upvotes
905
I like to use these charts to compare: https://cdn.canadiancouchpotato.com/wp- ... ec2020.pdf

Having 100% in the S&P vs a globally balanced portfolio will yield different returns and volatility.

In the past 10 years a pure S&P portfolio would have outperformed a more balanced portfolio. No one can predict the future so up to you.

Wealtsimple also shows its portfolio breakdown very clearly so just play around and find something you are comfortable with.

Something that cannot be measured is.. with WS it buys every week/month what ever you setup. If the market is tanking will you still be buying ETFs? Where WS would be.

Something to consider. You could also just purchace Eseries all US fund if you want automatic purchases of strictly the S&P
[OP]
Newbie
Mar 5, 2021
24 posts
3 upvotes
Thanks for the advises! I was just using S&P as a benchmark to see if Wealthsimple growth portfolio can even beat it, the comparable ETFs would be VGRO, XGRO, or even HGRO. I'm just curious about their numbers to see if they can beat S&P.
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Feb 1, 2012
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Thunder Bay, ON
WS Growth Portfolio has 75-90% equity, compared to 80% equity for VGRO, so those are reasonable to compare.

WS portfolio performance is hard to find on its site but if you dig around it is there: https://help.wealthsimple.com/hc/en-ca/ ... 0058460893
VGRO performance is easy to find on vanguardcanada.ca... just click the performance tab.
Unfortunately VGRO only has 2 years history and WS has 4 years. Neither of those are long enough to demonstrate significantly better results.

VGRO: 2019 10.9%, 2020 17.8%, 2 year compound 14.3%
WS Growth: 2019 16.8%, 2020 9.8% 2 year compound 13.2%
Again 2 years is not long enough to demonstrate long-term performance. You cannot compare cumulative performance from their respective websites because Vanguard lists performance as of Mar 31, whereas the most recent performance I could find on WS website is Jan 29th.

VGRO MER: 0.25%
WS Growth MER=0.13 + for >100k the management fee = 0.4% for a total of 0.53%, or 0.63% for <100k.
WS total fee is more than double that of VGRO. For that, WS brags it is Backed by "Nobel Prize-winning research", but guess what? VGRO is also designed according to the same modern portfolio theory.

Vanguard sticks to very basic, market-cap weighted indices according to a well documented target asset allocation. WS uses a broader range of strategies including low-vol equities, hedged equities, gold and a weird combination of 16% long-term bonds and 1% short-term debt, changing those holdings as it sees opportunities.

So do you think WS can overcome a fee that is more than double with its more esoteric funds and asset allocation adjustments?

Oh yeah: S&P500 should outperform either over the long-term because it is 100% equities, but it will be more volatile and could go through long periods of bad performance like it did in the lost decade of the 2000s where a dollar invested at the start of 2000 dropped below $0.62 at the end of 2002, below $0.64 at the end of 2008, and did not stay above its starting value until some time in 2012. S&P500 2000 to 2020
I solemnly swear, to never assume I have an inkling at which direction the market will head, and to never make any investments based on a timing strategy.
[OP]
Newbie
Mar 5, 2021
24 posts
3 upvotes
Deepwater wrote: WS Growth Portfolio has 75-90% equity, compared to 80% equity for VGRO, so those are reasonable to compare.

WS portfolio performance is hard to find on its site but if you dig around it is there: https://help.wealthsimple.com/hc/en-ca/ ... 0058460893
VGRO performance is easy to find on vanguardcanada.ca... just click the performance tab.
Unfortunately VGRO only has 2 years history and WS has 4 years. Neither of those are long enough to demonstrate significantly better results.

VGRO: 2019 10.9%, 2020 17.8%, 2 year compound 14.3%
WS Growth: 2019 16.8%, 2020 9.8% 2 year compound 13.2%
Again 2 years is not long enough to demonstrate long-term performance. You cannot compare cumulative performance from their respective websites because Vanguard lists performance as of Mar 31, whereas the most recent performance I could find on WS website is Jan 29th.

VGRO MER: 0.25%
WS Growth MER=0.13 + for >100k the management fee = 0.4% for a total of 0.53%, or 0.63% for <100k.
WS total fee is more than double that of VGRO. For that, WS brags it is Backed by "Nobel Prize-winning research", but guess what? VGRO is also designed according to the same modern portfolio theory.

Vanguard sticks to very basic, market-cap weighted indices according to a well documented target asset allocation. WS uses a broader range of strategies including low-vol equities, hedged equities, gold and a weird combination of 16% long-term bonds and 1% short-term debt, changing those holdings as it sees opportunities.

So do you think WS can overcome a fee that is more than double with its more esoteric funds and asset allocation adjustments?

Oh yeah: S&P500 should outperform either over the long-term because it is 100% equities, but it will be more volatile and could go through long periods of bad performance like it did in the lost decade of the 2000s where a dollar invested at the start of 2000 dropped below $0.62 at the end of 2002, below $0.64 at the end of 2008, and did not stay above its starting value until some time in 2012. S&P500 2000 to 2020
Thanks for your work!! This is what I was wondering about, is it really worth to pay the extra 0.4-0.5% fee for Wealthsimple growth portfolio VS. I can just buy VGRO or XGRO.
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Jan 27, 2004
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T.O. Lotto Captain
I been doing an automatic contribution to my wealth simple tfsa every bi-weekly check since mar 2020
Its set @ 90/10 equities to fixed income.
I’m up 12.9% as of my latest statement.

I like the convenience of set date Pre-authorized debits on the day of my pay check. Its like a dumb mental trick to force myself to save. I just “pretend” whatever i have after the debit is all the money i have for the month.
Newbie
Oct 22, 2020
52 posts
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I think WealthSimple's value proposition is better in taxable accounts, where you can claim the 0.4-0.5% fees (ex-fund fees I'm referring to) as expenses. Back in the day say with 100k, you can claim the $400 in fees, and get an additional say $150-200 of value via the Priority Pass airport lounge passes. Keep in mind a few years ago there were a lot less no-fee ETF purchase options. Compared to paying $7-10 fees 24 times a year, the fee difference is not as dramatic and may even be in WealthSimple's favor for smaller accounts.

Of course now with no fee ETF purchase options, you can save on fees with DIY. But I would say the greatest value is for people who wouldn't have invested or continue to invest without setting up an automatic schedule and who don't want to get to the details of each fund.
Deal Addict
Jan 6, 2013
1135 posts
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WATERLOO
The biggest thing for me is the set it and forget it ability. Have the biweekly direct deposit set up to contribute up to max contribution for the year. I won't need this money for another 30 years or so. I'll take a peak once in a while but I literally just forget it. If you set it and forget it you can go on with your daily life with no emotions attached to it, then when you are ready take use that money it'll be like finding money under a mattress. I of course have other things in addition to this (other investment account, pension, etc)
Deal Addict
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Feb 1, 2012
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30seconds wrote: Something that cannot be measured is.. with WS it buys every week/month what ever you setup. If the market is tanking will you still be buying ETFs? Where WS would be.
ballashotcaller wrote: The biggest thing for me is the set it and forget it ability. Have the biweekly direct deposit set up to contribute up to max contribution for the year. I won't need this money for another 30 years or so. I'll take a peak once in a while but I literally just forget it. If you set it and forget it you can go on with your daily life with no emotions attached to it, then when you are ready take use that money it'll be like finding money under a mattress. I of course have other things in addition to this (other investment account, pension, etc)
Yes, important points. It takes a lot of tenacity and discipline to stick to your investing plan. For many investors, they are their own worst enemy when it comes to succumbing to the hype and emotions of the ups and downs of investing markets. Robos take that issue away which could lead to greater success. The real answer is learn to understand investments and stick to a plan, but robos can takes away your ability to screw up.
I solemnly swear, to never assume I have an inkling at which direction the market will head, and to never make any investments based on a timing strategy.
Deal Addict
Jul 8, 2013
1922 posts
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Red Deer, AB
rfder21 wrote: Does Wealthsimple Robot adviser growth portfolio beat typical index ETF like S&P 500? Can anyone with Wealthsimple growth portfolio share their annual performances?
Based on this (https://help.wealthsimple.com/hc/en-ca/ ... 0058460893), I did a few calculations:

From Jan 1, 2015 to Dec 31, 2020, WS Growth yielded 7.79% average annual return.

Balanced Td e-series, during the same time-frame gave 8.15% return per year.

CCP VAB, VXC, VCN gave 8.60% average return per year.
CCP ZAG, XIC, XAW gave 8.64% average return per year.

WS Growth is good if you don't know what you're doing or you're just starting. This is what I recommend to all of my family and friends.

But WS Growth will never beat a true off-hand CCP as WS Growth charges fees that directly eats into your return.

That is why low-fees are so paramount, and the only reason why I switched from TD e-series to ETFs.

Hope this helps.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: Dividend-paying individual stocks (tax purposes)
Deal Addict
Jul 8, 2013
1922 posts
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Red Deer, AB
Deepwater wrote: WS Growth Portfolio has 75-90% equity, compared to 80% equity for VGRO, so those are reasonable to compare.

WS portfolio performance is hard to find on its site but if you dig around it is there: https://help.wealthsimple.com/hc/en-ca/ ... 0058460893
VGRO performance is easy to find on vanguardcanada.ca... just click the performance tab.
Unfortunately VGRO only has 2 years history and WS has 4 years. Neither of those are long enough to demonstrate significantly better results.

VGRO: 2019 10.9%, 2020 17.8%, 2 year compound 14.3%
WS Growth: 2019 16.8%, 2020 9.8% 2 year compound 13.2%
Again 2 years is not long enough to demonstrate long-term performance. You cannot compare cumulative performance from their respective websites because Vanguard lists performance as of Mar 31, whereas the most recent performance I could find on WS website is Jan 29th.

VGRO MER: 0.25%
WS Growth MER=0.13 + for >100k the management fee = 0.4% for a total of 0.53%, or 0.63% for <100k.
WS total fee is more than double that of VGRO. For that, WS brags it is Backed by "Nobel Prize-winning research", but guess what? VGRO is also designed according to the same modern portfolio theory.

Vanguard sticks to very basic, market-cap weighted indices according to a well documented target asset allocation. WS uses a broader range of strategies including low-vol equities, hedged equities, gold and a weird combination of 16% long-term bonds and 1% short-term debt, changing those holdings as it sees opportunities.

So do you think WS can overcome a fee that is more than double with its more esoteric funds and asset allocation adjustments?

Oh yeah: S&P500 should outperform either over the long-term because it is 100% equities, but it will be more volatile and could go through long periods of bad performance like it did in the lost decade of the 2000s where a dollar invested at the start of 2000 dropped below $0.62 at the end of 2002, below $0.64 at the end of 2008, and did not stay above its starting value until some time in 2012. S&P500 2000 to 2020
Nicely done.

I'll add a few notes:
- Go with TD e-series mutual funds if your portfolio is less than $250K and you're adding to your portfolio on a monthly basis.
- TD e-series funds are an EXCELLENT way to get started. Further, they are excellent products with the lowest fees of indexed mutual funds in Canada.
- TD e-series allow you to buy these funds for free. They also allow you to sell and switch for free as well.
- Once your portfolio is large, you can consider moving to ETFs but this is not a requirement.
- Highest portfolio value happens when you reduce your costs. This can be done via ETFs (ZAG + XEQT would be my preferred ETFs right now).
- Only do WS Growth if you don't want to buy individual mutual funds, or if you are just starting.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: Dividend-paying individual stocks (tax purposes)
Jr. Member
Jul 27, 2018
166 posts
90 upvotes
that's a good post. i was crunch for time and didn't have time to do my research this year, BUT I plan to self-managed both ETF, stocks and Crypto myself for my investments in 2021.
do they also have some "operational " fees?
Deal Addict
Dec 4, 2011
1773 posts
1328 upvotes
Montréal
You pay 0.5% management fee to WS Invest (tax deductible) and the ETF fees (which are 'transparent' and included in the price). 100K+ gets you black and 0.4% fee
[OP]
Newbie
Mar 5, 2021
24 posts
3 upvotes
TuxedoBlack wrote: Based on this (https://help.wealthsimple.com/hc/en-ca/ ... 0058460893), I did a few calculations:

From Jan 1, 2015 to Dec 31, 2020, WS Growth yielded 7.79% average annual return.

Balanced Td e-series, during the same time-frame gave 8.15% return per year.

CCP VAB, VXC, VCN gave 8.60% average return per year.
CCP ZAG, XIC, XAW gave 8.64% average return per year.

WS Growth is good if you don't know what you're doing or you're just starting. This is what I recommend to all of my family and friends.

But WS Growth will never beat a true off-hand CCP as WS Growth charges fees that directly eats into your return.

That is why low-fees are so paramount, and the only reason why I switched from TD e-series to ETFs.

Hope this helps.
Thanks for the work! I find the numbers are very interesting.
[OP]
Newbie
Mar 5, 2021
24 posts
3 upvotes
TuxedoBlack wrote: Nicely done.

I'll add a few notes:
- Go with TD e-series mutual funds if your portfolio is less than $250K and you're adding to your portfolio on a monthly basis.
- TD e-series funds are an EXCELLENT way to get started. Further, they are excellent products with the lowest fees of indexed mutual funds in Canada.
- TD e-series allow you to buy these funds for free. They also allow you to sell and switch for free as well.
- Once your portfolio is large, you can consider moving to ETFs but this is not a requirement.
- Highest portfolio value happens when you reduce your costs. This can be done via ETFs (ZAG + XEQT would be my preferred ETFs right now).
- Only do WS Growth if you don't want to buy individual mutual funds, or if you are just starting.
Thanks for the advise!
Deal Addict
Jul 8, 2013
1922 posts
2579 upvotes
Red Deer, AB
rfder21 wrote: Thanks for the work! I find the numbers are very interesting.
You're welcome.

I also found this exercise fun and enlightening. The difference between 7.79% and 8.64% per year is not a lot on a small portfolio (less than $100 on a $10K portfolio). But it adds up over time if your portfolio is north of $100K, as now you're looking at roughly $1K per year in extra fees.

At $1M, you're looking at $10K savings if you switch from WS Growth to one via ETFs. But, buying/purchasing ETFs comes with its own set of issues such as when to buy, market timing, and whole bunch of behavioural biases that plague even the best of us.

So unless you have a solid investment plan and are a seasoned investor, I'd recommend sticking with TD e-series or WS Growth.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: Dividend-paying individual stocks (tax purposes)
Deal Guru
Dec 5, 2006
10233 posts
5320 upvotes
Markham
TuxedoBlack wrote: You're welcome.

I also found this exercise fun and enlightening. The difference between 7.79% and 8.64% per year is not a lot on a small portfolio (less than $100 on a $10K portfolio). But it adds up over time if your portfolio is north of $100K, as now you're looking at roughly $1K per year in extra fees.

At $1M, you're looking at $10K savings if you switch from WS Growth to one via ETFs. But, buying/purchasing ETFs comes with its own set of issues such as when to buy, market timing, and whole bunch of behavioural biases that plague even the best of us.

So unless you have a solid investment plan and are a seasoned investor, I'd recommend sticking with TD e-series or WS Growth.
Thanks

I invested in TD e series, but i only invest in US index and TSX index , I didn't really invest in bond index and international index, is that ok?
Deal Addict
Jul 8, 2013
1922 posts
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Red Deer, AB
smartie wrote: Thanks

I invested in TD e series, but i only invest in US index and TSX index , I didn't really invest in bond index and international index, is that ok?
It depends upon your risk tolerance when it comes to bonds.

Regarding Int'l index, my view is that I simply don't know which market will outperform (or conversely, underperform) over the next decade, and the decade after that.

Therefore, I own all: 1/3 in Canadian Equity, 1/3 in US, and 1/3 in Int'l.

Note that Int'l is now quite undervalued (and US is very overvalued) which *might* mean that Int'l may outperform US over the next 10 years. But who knows?

Trick is to find one strategy and then stick to it no matter what. I'm not going to change my equitie allocation (33% each in CAD/US/Int'l) no matter what. I also have 25% of my portfolio in bonds, so my real breakdown is as follows: 25% in bonds, 25% each in CAD/US/Int'l equities.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: Dividend-paying individual stocks (tax purposes)
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Oct 14, 2001
1699 posts
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GMA
TuxedoBlack wrote: I'll add a few notes:
- Go with TD e-series mutual funds if your portfolio is less than $250K and you're adding to your portfolio on a monthly basis
An alternative is to use iShares XGRO, XBAL or XCNS and the Pre-Authorized Cash Contribution (PACC) feature to automatically buy units commission-free every month/quarter/year.

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