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Growney is another Germany based robo advisor that offers risk managed portfolios for investors that want to completely automate their investment portfolios.
Growney’s approach is simple: offer five different portfolios with a different weighting between stocks and bonds. The more stocks in the portfolio, the higher the risk but the greater the potential return. Portfolios with less exposure to stocks have less risk, but also less expected returns. Clients choose which portfolio suits them and Growney invests in that portfolio for them, and does the ongoing management and rebalancing.
The five portfolios offered are the Grow 20, Grow 30, Grow 50, Grow 70, and Grow 100. The lower numbered portfolios have more bond exposure (i.e. safer with lower returns) and he higher numbered portfolios have less bond exposure (i.e. riskier with higher returns).
Before getting into more detail about Growney’s approach to investing, here is a summary of their robo advisor services:
Growney does not require a minimum deposit to open an account with them. Users can sign up and tour the site and get portfolio recommendations without investing any money.
However, to get started with one of the five portfolios, money must be invested with the company. They do not stipulate on the website what the true minimum investment is, but it is assumed that investors can start with as little as one euro.
Growney starts all investors off with a risk management questionnaire to determine the client’s risk appetite. There are only ten questions in the questionnaire, however that is all that is needed to determine what risk bucket the client falls into and therefore which one of Growney’s five portfolios will match.
Each one of the five portfolios has a different risk profile. On the safest end is the Grow 20 has 20% of the portfolio allocated to equities and 80% allocated to bonds. This portfolio will work to preserve the investor’s capital, but at the expense of a large expected return. This portfolio only has an expected return of 2.57%.
On the riskiest end, the Grow 100 has 100% of the portfolio in stocks and is therefore the riskiest. This portfolio is only intended for investors who are comfortable taking on a lot of risk and who have a longer than average investment time line. There should be at least ten years of before retirement for investors to be invested in the Grow 100. The reward for the higher level of risk is the additional return that is expected. The Grow 100 has an expected return after costs of 7.65% per year after all costs. That is significantly higher than the Grow 20.
Growney uses exchange traded funds to build each portfolio. The equity funds selected contain exposure to over 2,400 shares in more than 45 countries worldwide. They are weighted according to their economic importance and provide investors with global diversification and risk management.
Growney uses a tiered pricing model, with less fees paid with the more money that is invested with them. There are no hidden fees or extra changes assessed, except by the exchange traded funds that are used to build each portfolio.
Fees start at 0.99% for investment below €10,000 but drop to 0.39% for amounts over €50,000.
These fees cover all the costs associated with the robo advisor platform, including:
• Account and account management order fees
• Automatic rebalancing
• Fund selection and monitoring
• Detailed reports on portfolio performance
• Tax optimization
• Customer service via phone, e-mail and chat
• User-friendly web application
Opening a Growney account is done completely online. Potential clients are walked through the complete process, including completion of the risk management questionnaire, and linking the account with the user’s bank account.
Once complete, clients then confirm which portfolio – the Grow 20/30/50/70/100 – they want to put their money into and Growney does the rest. This includes ongoing account maintenance like rebalancing and tax optimization.
With the number of robo advisors in Germany increasing, Growney’s experience, approach to financial technology, and five different portfolio options will fit the needs of investors looking for an easy to implement and basic portfolio. It is definitely worth considering if clients are German residents.