Fidelity Go performs, Capital One Investing fails in robot report

It was a less than stellar run for the robo-advisor formerly known as United Income.

Backend Benchmarking’s quarterly Robo Report ranked the product, now owned by SageView Advisory Group, as the worst performer in the table, with a score of 5.28 out of a maximum of 25 points.

For comparison, top performers SoFi, Axos Invest and SigFig reached 23.78, 22.32 and 21.90 respectively. The “performance” score is created using two measures: the Sharpe ratio to measure risk-adjusted returns and whether each robot performs above or below the standardized benchmark.

Capital One Investing was the worst performer over a three-year period, returning 11% annualized, more than 3.6% below the normalized benchmark. Wealthfront, SoFi and Axos Invest all posted annualized returns of over 15%.

Capital One Investing is one of the most expensive robo-advisor options out there, with a fee structure starting at 99 basis points.

In January, Capital One sold the assets and employees of its robo-advisor to SageView, a pension-focused RIA based in Newport Beach, Calif. The bank had bought United Income just two and a half years earlier, in July 2019, and renamed it Capital One Investing in July 2021.

While independent robo-advisors like Betterment and Ellevest have primarily targeted young digital-savvy retail investors with small account sizes, United Income and Capital One have both opted to market their product to wealthy retired savers, offering to help senior clients withdraw from their 401(k)s and apply for Social Security benefits.

SageView has not yet announced any branding changes to Capital One Investing. The acquisition is expected to be completed in the second quarter of this year.

In terms of longer-term returns, Fidelity Go, SigFig and Axos were the top performers for the five-year period, boosted by a shared bias towards large-cap stocks, an overallocation to growth stocks and a bias “healthy” American who propelled portfolios during the end of the bull market.

While these products have dominated the power rankings for the past few quarters, Backend Benchmarking researchers believe a changing of the guard is on the horizon, spurred by an investment environment characterized by volatility, inflation and rising interest rates.

“Value has done better this year, in light of higher inflation, as have short-dated bonds – in light of multiple rate hikes reported by the Fed. Both of these moves will likely favor new bots at the top rankings in 2022,” the researchers wrote. “Specifically, we expect Schwab, Wealthfront, and Personal Capital to start showing compelling relative performance as their tendencies to favor more value-oriented portfolios and, in some cases, exposure to commodities and energy stocks boost relative performance versus the current regime of Fidelity, SoFi, SigFig and Axos among the best long-term performers.