ROBO Portfolio Update: May 2015

It’s been about 3 or so months since I setup my online portfolio that is being managed by a Robo Advisor service.  I thought it would be a good time to check in and see what’s been going on in the portfolio and what my ROBO has been up to.

I have received a some great feedback on this blog series. The blog has also reached the echelons of some of the players in this new and evolving service and has given me the opportunity to reach out to some of these players to get their perspectives and context on the whole service.

First let’s go to the dashboard!

 Performance Stats

The reason I decided to setup a ROBO portfolio is to see from a performance perspective if this type of service can deliver meaningful returns on my investment. That’s why we invest…to make money! Below are the performance returns to date. The ROBO service does a pretty good job in laying out the numbers in a very simple easy to understand format. It tells me the overall return as well as the return for each of the ETF’s in the portfolio. Below is snapshot of the performance to date and the breakdown of the performance of each asset component of the portfolio.

As of this writing, the ROBO portfolio is up 3.4 percent since it was setup in January, which is OK and I’ll just leave it at that as 3 months performance is just too small a sample size to say anything meaningful. The judgement will come much, much later in the future. Suffice to say, positive returns are always a good thing.

It appears all of the components are in positive except for the Real Estate component which is down 2 percent year to date.


One of the benefits of the using an automated portfolio management service like a Robo Advisor is that system will rebalance your portfolio when a certain components of the portfolio stray away from their target asset allocations. It appears that service has done this in attempt to keep the asset allocations as close to the targets as possible. Below are a listing of dividend payouts received as well as transactions made by ROBO in March and April:

Dividends Received,  March 6, 2015

PHR paid $1.61

PBD paid $2.40

PDF paid 1.95

Rebalancing Transactions March 24, 2015

Bought PHR $21.81

Dividends March 31, 2015

VTI paid $2.16 US

XIC paid $3.41

Dividends April 8, 2015

PHR Paid $1.68

PBD paid $2.52

PDF paid $1.95

Rebalancing Transactions April 13, 2015

Buying PBD $20.52

The intention of the ROBO here is to reinvest any income payments (dividends and interest income) back into the portfolio to maintain the target asset allocation. So far ROBO has not sold any positions in any of the ETF’s. It has been essentially building cash from income and adding to current positions where there the allocation is below target.

It is important to understand that the transactions initiated (especially the iShares and Vanguard ETF components) are not driven by fundamentals taking place within the companies within the ETF or by the overall market. The goal again is about maintaining asset allocation weightings among the various asset classes. The Purpose ETF’s fund holdings are more driven by specific evaluation criteria used internally to build their ETF holdings.

Some Context

One of my initial reactions when I first examined the ROBO portfolio was how it adopted the use of more actively managed oriented ETF’s and exclusively the Purpose Investments ETF’s. I questioned if using these types of funds was overkill especially since more passive ETF’s in the ROBO portfolio had similar exposure indirectly and I wondered if these type of products are suitable for more risk averse investors. Since my initial musings there has been some reaction, most notably from Purpose Investments themselves and its CEO Mr. Som Seif. Mr Seif actually reached out to me and offered to meet with me to provide more context into their line of ETF products. Mr. Seif if you don’t know founded the highly successful Claymore ETF funds which he sold several years ago to Blackrock Investments which runs the iShares line of ETF’s. Mr. Seif is one of the true pioneers and champions in Canada for low cost index investing and has been a welcome disruptive force in the industry.

Mr. Seif and I met up and we had a great discussion where he provided a very detailed overview of the Purpose product line and most importantly, he shared with me his vision and ideology about his funds and why he is so passionate about them.  According to Mr. Seif, the financial meltdown of 2008-09 hit him deeply hard personally because of how violent the decline was. It was in his words, “a punch in the gut” for him and it forced him to rethink better approaches to smoothing out those rapid declines to better manage shocks that will no doubt occur again in the future.  The ETF’s in the Purpose line were developed and are managed with this philosophy in mind, managing volatility or controlling losses.  Mr. Seif is very up front and comfortable saying he’s willing to underperform the overall market if it means preserving his investors capital, which can be just as powerful mechanism to growing wealth. He believes strongly that his ETF’s will not get sucker punched in the next market downturn.

I agree with Mr. Seif that investing is not solely about generating gains but also as much about controlling your losses and it is a tenant that I preach with my clients. Managing losses is a function of having discipline and awareness of identifying the level of loss or volatility you are comfortable with. From that perspective, the Purpose line has potential to provide that discipline within my ROBO portfolio. With that context in mind, I feel a little more comfortable with the rationale to holding their ETF’s. As always it looks great conceptually. The proof will be in the performance. The Purpose line has been around for about 3 years so it is still building up a track record. It will be interesting to see how they perform.

Next Robo Portfolio Update 

Robo Advisors - A personal experience - Part 1: Getting Started