I had a few conversations with the Wisealpha staff (who were excellent as always!) and have now been been experimenting with Robowise (RW) over the last month - has anyone else has been using it?
Positives so far:
- It aims to hold an equal £ weighting of all bonds in the market (unless you de-select specific bonds), which minimises admin, and snaps up any bonds that have limited liquidity and might otherwise be hard to buy.
- Automatic rebalancing is a great feature and may give a slight boost to returns (buy low, sell high, triggered by price changes)
- When a new bond is added to the market it’s automatically incorporated into the portfolio.
- I really like that it’s possible to have multiple RW portfolios AND manual bond purchases in one wisealpha account.
Some other thoughts:
- RW tries to hold all bonds equally at the target level, and will adjust a holding if any bond is more than £5 away from the target. A great objective.
- My main frustration is that getting to this position take AGES, at least weeks, and possibly months. In the meantime there is random overexposure and underexposure to certain bonds. Some could be double or half the target value.
- As I understand it (although please correct me if wrong): RW will look for underweight bonds to top up, and ONLY THEN place some overweight bonds up for sale. Once these bonds are sold (it might take some time), it will go back and try and buy the underweight bonds, if they’re still available.
- My sense is that this is a drag on liquidity (RW’s default position is not to offer bonds for sale) and really slows down the rebalancing.
- Could we have an option to hold a small amount of cash in RW? e.g. a tick-box in the list along with all the other bonds? This would only need to be a minimal amount (e.g. 1% of portfolio, or a £ value) and would have a negligible impact on returns.
- The order of execution is then reversed: RW FIRSTLY offers overweight bonds for sale. This increases liquidity in the market. That sale goes into cash.
- As soon as a bond becomes available to buy, RW has cash on hand to execute immediately.
- This allows RW to IMMEDIATELY place new overweight bonds up for sale, further adding to liquidity.
In general I’m a big fan of wiseakpha and love to see the company progressing. I think the more transparently we can be about RW, the more confident people will be about putting more of their hard-earned savings into its hands