“Robo-advisors faced their first big challenge with the bear market in the first quarter of 2020. They lost, and that is an ominous sign for the future of automated advice.
All robos employ a degree of active management. They deviate from the cap-weighted market portfolio through fund selection or sector allocation. As active managers, robo-performance can be fairly viewed only through a full market cycle. Nobody needs an active manager in a bull market; index returns are adequate. Active management shows its value in its ability to protect against adverse market conditions. The market downturn in the first quarter gave us that opportunity.” – Robert Huebscher, Advisor Perspectives