Illustration: Sarah Grillo/Axios
Robo-advisors are gaining in popularity, offering investors cheaper, customized portfolios — but when it comes to crypto, even they won't take their own advice.
Why it matters: Most of the big traditional shops' robos won't touch crypto just yet, and the ones that do aren't necessarily eating their own cooking. That is — the core portfolios on which their performance is graded don't carry a dose of the crypto wares they offer customers.
Context: The conceit of the robo-advisor is to make investment advice more accessible to the average person.
State of play: The Robo Report, effectively a quarterly performance review for well-known robo-advisors, tracks dozens of such platforms built by asset management titans like Vanguard, to fintechs like Acorns, Betterment, SoFi and Wealthfront.
The big picture: Robo-advisors, in theory, are good — they have lower minimum buy-ins (if any at all), offer low-cost ETFs and mutual funds and services like tax-loss harvesting. Some even offer live human advisors for additional support.
Zoom in: But are they as effective in the realm of crypto?
Details: Betterment's crypto portfolios try to give customers direct access to the underlying crypto via a separately managed account through Gemini, Leahy says.
But this comes at a cost. The effort to deliver crypto via a non-packaged product means higher relative fees than investing in stocks.
Zoom out: What you're not seeing, is funds incorporating crypto into the asset-allocation model, Leahy says. Put another way — funds are still treating crypto as an opt-in, and not in their core portfolios.
What they're saying: "We don’t have a great way to gauge the long-term expected return of crypto. It’s sort of like gold. You need estimates of expected return," Alex Michalka, Wealthfront's director of investments, tells Axios.
Between the lines: Because there are no fundamentals driving bitcoin — no cash flow expectations to measure and model — it's hard to predict where prices will go.
Crystal's thought bubble: But wouldn't it be interesting to see these crypto products in action in real-world portfolios over the good times and the bad.
