In 2024, North American markets have seen a significant upswing, largely attributed to recent interest rate cuts and a surge in investor confidence. Major Canadian robo-advisers have reported impressive after-fee returns of 22% to 26% for growth portfolios for the year ending September 30, 2023. Notably, the Vanguard Growth ETF Portfolio (VGRO-T) and the iShares Core Growth ETF Portfolio (XGRO-T) both achieved approximately 25% growth during the same period. This marks the second consecutive year of strong returns for robo-advisers, following a challenging 2022. [767e2fa9]
The performance of these robo-advisers has been noteworthy, with three-year annualized returns ranging from 5.5% to 8%, and five-year returns between 7% and 10%. However, CI Direct Investing did not disclose specific performance data due to compliance reasons. Additionally, several robo-advisers have begun offering the First Home Savings Account (FHSA), which was launched on April 1, 2023, catering to new investors looking to save for their first home. [767e2fa9]
The asset allocation for growth portfolios among these robo-advisers varies, with some portfolios consisting of 80% stocks and 20% fixed income, while others adopt a 70-30 mix. Fees for robo-advisers can differ significantly, particularly for Environmental, Social, and Governance (ESG) funds, which typically come at a higher cost. Robo-advisers tailor their portfolios based on individual client needs and risk tolerance, charging a monthly management fee. Importantly, assets managed by these firms are protected by the Canada Investor Protection Fund, which covers up to $1 million. [767e2fa9]