I’ve written quite a bit about Scalable Capital over the years, so here’s my retrospective after 5 years of experience. In May 2016, I opened my first portfolio with a 10% VaR (Value at Risk), and a year later, I opened another with a 20% VaR. In 2016, I also gave a sum of money to my financial advisor, but a few months later, so the data isn’t directly comparable. My advisor charges 1% and reimburses kickbacks and account fees, so the fees are roughly comparable. The data, here the time-weighted returns, don’t exactly speak in favor of Scalable Capital:
Portfolio
2016 (Partial Year)
2017
2018
2019
2020
2021 (YTD)
Total
SC 10% VaR
2,96%
1,83%
-4,92%
13,43%
-3,55%
1,44%
10,09%
SC 20% VaR
–
3,87%
-6,88%
14,26%
-10,45%
4,59%
2,64%
Financial Advisor Portfolio
0,45%
8,91%
-9,06%
19,08%
4,3%
6,83%
32,01%
5 years is still not a long time span, but the performance is far from what my financial advisor achieves. The 20% VaR portfolio was also rarely above the 10% VaR portfolio. Therefore, I decided to close that portfolio (this can be done via the profile), and I’ll continue monitoring the 10% VaR portfolio.
What also contributed to my decision was the data protection incident in October 2020 and the way Scalable Capital handled it. When I asked in the chat, I was pretty much brushed off. And if you search for the information on their website, you’ll find a link somewhere in the footer, but it seems like it hasn’t been updated in a while. At Scalable Capital, I will keep my above-mentioned portfolio and also my Free Broker investment.
If you sign up via my referral link at Scalable Capital, you and I will receive a small bonus! There are no additional costs for you.
Growney
I came across Growney through a tip from Finanztip. I was looking for a way to invest money for my children with less than €10,000 in initial capital. There is no children’s account available there, which has the disadvantage that the saver’s allowance is used up. But, what I found convincing, is the option to give relatives the IBAN of the portfolio (which is called the “investment goal”) so they can simply transfer money, which is then invested according to the chosen strategy. I no longer have to worry about it myself. Investments can start with €500 or €25 monthly.
I also set up a portfolio for myself, and what I really like is the option to invest entirely sustainably.
Growney does not offer an app. Initially, this isn’t a big deal, since most users already have too many apps installed. However, navigating through the mobile site is a bit cumbersome, as the login link is initially “hidden” in the burger menu.
What stands out is that it takes unusually long for a deposit to be invested. This is not clearly explained. Money that was credited two days ago is simply still displayed as cash. Unlike Scalable, it also seems that there is no real-time display of the portfolio value, and sometimes it doesn’t even seem to be updated daily. Growney may not be as sleek as Scalable, but that’s really not important.
If you sign up via my referral link at Growney, there’s a bonus for you and me (this bonus changes from time to time, so please check what is currently available).
Start – Blog – Scalable capital in der corona krise
In January, I was still thinking about writing about the good values of my Scalable Capital portfolios (the screenshot doesn’t even show the maximum values), but that would only be a historically interesting memory, because March was a steep downhill. Both portfolios were deep in the red for a while, now at least the 10% VaR portfolio is slightly up again, not only the DAX has risen again. I am not an investment specialist and will definitely not make a forecast for the next few months, but I have decided for myself that I will leave everything as it is, even if Scalable Capital has achieved worse values than its market competitors in this environment.
In the FinanceForward podcast, SC founder Erik Podzuweit tells us that the current crisis is statistically extremely rare (I would have called it extremely unlikely) and that you have a worse performance due to the high equity shares. Example: At quirion, I had a fixed equity component of 50%, with my Scalable Capital 20% Value at Risk portfolio it was higher. What doesn’t come out so well in the interview is that Scalable Capital has kept its promise with VaR control (at least in my portfolios). A 10% VaR means that there is a 95% chance that my portfolio should not go lower than 10% within a year. While Mr. Podzuweit speaks of convenience as the USP of Scalable Capital in the podcast, that would be a much larger USP for me: I am very likely to lose a maximum of 10 or 20%, depending on the portfolio, even if the market develops even more negatively. That worked well for me, even with the 5% uncertainty.
But this also has a disadvantage: because the sold shares are gone. If the stock markets hopefully recover soon, then it may be precisely these shares that will be bought again. This means transaction fees, but you may also buy back shares at a higher price than you sold them. This is not a criticism of Scalable Capital, because you can’t have one without the other. Either I want to have an ejection seat, if you want to call the value at risk approach, or I want to keep my plane.
Unfortunately, I cannot report how my investment advisor performs with the manually compiled portfolio. MLP has not yet managed to restore my access to the online portal. Update: in the meantime the access works, the portfolio is time-weighted at -1.84%, so a little worse than my 10% VaR portfolio at Scalable Capital, but a lot better than my 20% VaR portfolio.
My 5th article about scalablecapital, in total I have been with Scalable for a little over 3 years now and keep comparing with the results of my financial advisor. After he had always won in recent years, something is now changing in the field. First of all, let’s look at the data, here’s the time-weighted return:
Portfolio
2017
2018
2019
SC 10% VaR
4,4%
3,92%
11.67%
SC 20% VaR
–
3,7%
6,02%
Financial adviser
7,81%
10,36%
9,66%
My financial advisor had made a reallocation, Scalable Capital does this more often. Unfortunately, I can’t show a nice screenshot of it because the SC app still prohibits it. It’s a pity, actually.
Steep development in my 10% VaR portfolio
However, the comparison between SC and the investment advisor is a little misleading, as I deposit some money with SC every month, but not with my advisor until the end of 2019. But, this should not have a very big influence.
Volatility of my 20% VaR portfolio
Overall, I am very satisfied with the development of Scalable Capital, also with the decision to create two portfolios with different VaR. But I will continue to entrust the sum to my financial advisors, because after all, 3 years is not a long time for an investment.
Comments (since February 2020 the comment function has been removed from my blog):
Markus
September 2019 at 10:43 I’ve only recently joined Scalable Customer. I find your long-term observations all the more interesting. In my opinion, your regular deposit does not play a role in the return. At least if you read the % value that is above “Time-weighted”. Put simply, this shows what has become of the first euro invested. Independent of deposits or withdrawals. (for the total return, the times of deposits and withdrawals are of course relevant)
My fourth article on the topic of Scalable Capital and my second on Quirion. Under my first article on Scalable Capital, there are a large number of comments, even from one of the Scalable Capital founders, and I am honestly always amazed at how some investors allow themselves to judge after only a few months of experience with Scalable Capital or other robo advisors. But that’s exactly what people are looking for: Experiences Scalable Capital is the most common search term that Google users use to get to this page. Time for an update.
The background
After I was not particularly satisfied with the performance of the 10% VaR custody account opened in May 2016 at Scalable Capital, I opened a second one with 20% VaR in August 2017 as well as a custody account with Quirion, the robo-advisor of Quirin Privatbank. Both providers require a minimum stake of €10,000, while Quirion still had an offer at the time that no or reduced fees would be charged up to €10,000.
Now I myself have not had good experiences with Stiftung Warentest, be it that one of the products I had worked on myself was tested unfairly (and the testers were more incompetent than I would have thought possible), be it that I followed a test report and bought a product that was grotesquely bad. Since then, I have become very cautious about Stiftung Warentest.
Quirion depot dissolved
And here, too, my experiences did not coincide with those of Stiftung Warentest, even if this institution is the last word in wisdom for most Germans. Nevertheless, after a year, I closed the custody account at Quirion again, and I will keep my two Scalable Capital portfolios.
In my opinion, the Quirion portfolio had sufficient potential with a 50%/50% share of bonds to stocks, but only achieved a 1.95% time-weighted return in this one year. I have not been able to observe any transactions, the portfolio seemed static to me, but maybe I have overlooked something here. The FAQ states that the custody account is updated at least once a year. By the way, this statement in the FAQ is strange:
At quirion, you entrust the management of your invested money to the quirion asset managers so that you have time for other things and don’t have to deal with new market developments and investment decisions on a daily basis.
Not a word about a RoboAdvisor. I have not found more details about how the robo advisor works here. More on that below.
Scalable Capital is completely different, here you can see a few transactions per month, in both portfolios. And the results? My 2nd portfolio at Scalable Capital with 20% VaR, which was launched at the same time, achieved a time-weighted return of 3.70% after one year, the development can be seen in the chart. The equity component here is 67%.
My 1st portfolio at Scalable Capital with 10% VaR, which is over 2 years old, has not necessarily performed better in the more than 2 years, but two different investment approaches are also implemented here. The equity component here is 34%. The time-weighted return is 3.92%, but I was never in the red here as with the more risk-averse portfolio; of course, this may also have been due to the timing.
Overall, a manageable performance from my point of view, after all, we were already around 4% with my older portfolio last year, but still better than Quirion’s. Of course, a year is not a lot of time. But I’m not done with my comparison yet.
Surprise: Humans are (still?)
As with the previous comparisons, my financial advisor is still in the running, who received the same amount as each of my portfolios at Scalable Capital. And for the second year in a row, it wins the comparison with a time-weighted return of 10.36%. The tool also gives a time-weighted return p.a., which I think is extremely valuable and actually necessary. This is 5.30%. According to his information, the money is also invested with a risk of loss of -10%, so I can compare it to Scalable Capital’s 10% VaR portfolio. However, his fee of 1% also goes down here. So that I don’t get any more questions about whether I can’t give investment tips myself (I can’t!), here is the link to my advisor’s XING profile; he has earned the publicity
It should also be mentioned here that, as far as I know, no reallocations have been made. In other words, as with quirion, the steady hand rules, but unlike quirion, the results are better.
Result
Either my investment advisor is a particularly good one or the robo advisors are not yet where they should be, or maybe even both. I don’t know. The robo advisor approaches of quirion and Scalable Capital also seem to differ fundamentally: While quirion offers more of a kind of assistant that selects an investment strategy based on rules that seems to have been configured by humans in advance, Scalable Capital uses the more innovative concept in my opinion and recommends portfolio rebalancing to the investment team; here, too, the algorithm does not trade itself, because it is apparently not allowed to do so yet. In my opinion, this is still the better approach, and he has also prevailed against Quirion in this one year, which is admittedly short. The difference between the RoboAdvorsor approaches is explained very well in SC’s FAQ.
But even with Scalable Capital, not all that glitters is gold. What annoys me about Scalable Capital: Just like Quirion, no time-weighted return p.a. is given. Why not? And why are you not allowed to take screenshots in the Android app? Absolute nonsense! And as written above, just under 4% in more than two years in the older portfolio is not an outstanding performance in my opinion, especially when you look at the results of my financial advisor.
2 years is still not a long time in finance. 1 year certainly not. Man still wins in my comparison.
Comments (since February 2020 the comment function has been removed from my blog):
Berner says
September 2018 at 21:10 Since April_2017 invested. Risk class 15%. Result after 1 1/2 years in my eyes BAD! approx. -1.5% time-weighted return. I imagined it differently! For investments mainly or exclusively in ETFs, the result is miserable in my opinion. If you had invested the money yourself in reasonable ETFs or stocks, the return would probably be different. I am not at all satisfied with the result after about 1.5 years (even though 2018 was and is a very volatile year). An event hosted by SC in 2017 prompted me to invest, which I now regret in retrospect.
Marc says
September 2018 at 08:16 Hello, I’ve also been with scalable capital since January 2017. Unfortunately, my portfolio has only increased by 1%. First with risk class 20 and for 8 months with the highest risk class. My conclusion after almost 21 months now – poor performance and I will leave Scalable Capital.
Mark Alexander says
December 2019 at 20:34 For me, between August 2018 and September 2019, Quirion turned a €20,000 stake after termination into €20101.71 – less than half the interest I received on the fixed deposit invested at the same time with Crédit Agricole! Actually, at the time of termination, my “total assets” were stated at approx. €20,570, which then mysteriously melted down by approx. €470 after the closure of the custody account. A rogue who wonders…….
After not being completely convinced of Scalable Capital’s performance after a year, I took two steps:
Created a second portfolio with Scalable Capital; for this purpose, money first had to be paid out to my reference account, which is then debited again for the second portfolio. Thanks to very friendly advice, I was also able to change my risk classification, so that more than 10% value at risk was possible. The second portfolio now operates at 20% VaR, currently 67% is invested in action.
Deducted some money and invested in Quirion. Also a robo advisor, here from the Quirin Bank. Quirion’s risk assessment allowed me to choose the middle package, 50% bonds, 50% stocks.
After a little more than a month, it is of course completely unprofessional to compare the previous performance values. Quirion is currently at 1.76% (second-weighted), Scalable at 1.77% (also time-weighted; my 10% VaR portfolio, which is over a year old, is at 4.21%, so it has fallen a bit since
1 year of experience with Scalable Capital report). As I said, the time that has passed so far is far too short for a comparison. But I would like to mention a few points that caught my eye.
Quirion offers as part of a promotion that the first €10,000 will be managed without a fee. After that or beyond, the administration costs 0.48%. Of course, it’s a bit unfair to compare Quirion and Scalable Capital in terms of costs. However, I find Quirion to be less transparent compared to Scalable Capital. First of all, only 0.48% is mentioned, but if you take a closer look, you will also find the average 0.39% Total Expense Ratio (TER), which is already priced into the ETFs. At Scalable Capital, the management fee is 0.75%, plus an average of 0.25% ETF fees. Somewhat incomprehensible to me is why the fees are higher at Quirion.Update Thanks to a commenter: The fee is currently 0.74%.
Quirion was the test winner in the robo advisor category, including Ökotest… although I wonder why Ökotest is testing robo advisors in particular? Because fewer consultants are needed to exhale carbon dioxide? Both, Quirion and Scalable Capital, were test winners in Extra Magazine. And Scalable was now also the winner in Capital. Somehow it’s difficult to compare when everyone somewhere is a test winner…
Unlike Scalable Capital, Quirion doesn’t have an app. Personally, I don’t think that’s super bad, after all, I don’t have to look at my investments every second. Overall, the Scalable app looks a bit more “smooth” and well thought-out on the web as well as on the mobile phone.
Scalable Capital is more agile in the rebalancing of investments. Since the creation of the second portfolio, 6 positions have been bought and sold (not including the initial purchases as well as commissions and fee movements). Nothing has been changed at Quirion. The portfolio is the same as on the first day. That doesn’t have to be good or bad, because a change can also be a disadvantage.
NO ETF from one portfolio can be found in the portfolio of the other. The list of Quirion’s investments:
iShares Euro Corporate Bond 1-5yr UCITS
SPDR Barclays EUR Corp. 0-3
iShares eb.rexx Government Germany 1.5-2.5yr UCITS
While I’m at it: I’m not only comparing the performance between two machines, but also with a manual investment strategy of my financial advisor, who has agreed to compete against the robo advisors, man against machine, so to speak. Cost: 1% of the portfolio value and supposedly also full transparency. The portfolio here is 7.81% return after one year, so compared to Scalable Capital, the human has won here. I didn’t expect that. But good. A point for the financial advisor. And deducted a little more money from Scalable and gave it to him.
Comments (since February 2020 the comment function has been removed from my blog):
Deshero says
December 2017 at 01:05 I don’t think you should see it that way, that your financial administrator was “better”. Simply because the robos try to keep the risk low. In 2017, the times were gold for stocks and if you take risks, you can get a lot out of it. I will now also invest in Scalable, because I think that you will do best in the long term. In my case, of course, only with maximum risk, because I think those who shy away from the risk do not need to hope for the profit. ^^
Tom Alby says
December 2017 at 01:29 In another article about Scalable, I point out that the risk should be reduced by Scalable, at least theoretically. So far, they have not had to prove it. Now, my investment advisor didn’t exactly choose the most risk-averse stocks, more like Quirion. And at the end of the day, it’s the result that counts.
Urs says
December 2017 at 17:04 It depends on the different approaches. Keeping risk low only makes sense if you really need it Keeping risk low (e.g. because I need the money in 3 months), but it costs a lot of return. That’s exactly what you can see with Scalable. Unfortunately, there is relatively little information in the Quirion “whitepaper” about the approach chosen by Quirion. The old saying “A lot of back and forth empties the pockets” still applies. A good approach should be able to generate a good return for people who want to invest for the long term.
Emmert Ralf says
January 2018 at 10:20 I also looked at a wide variety of robo advisors and ended up at Quirion. Your statement about the costs has become obsolete here, because Quirion partially dispenses with iShares products and uses the leading ETF provider Vanguard. As a result, Quirion’s fees have been significantly reduced.
Update on Scalable Capital: Here is the report after one year with SC!
My enthusiasm for Number26 is still there, even though a lot has changed since my first article:
Users can set up an overdraft facility
In the meantime, there are also EC cards
There is the possibility to deposit money with partners such as REWE and have it paid out
It is unpleasant that you can’t really pay everywhere with the cards. In London, an ATM refused to work with the credit card, and in America, several card readers showed an error message. So you should always have another credit card from another company with you, especially abroad. In Germany, the machines of the Nord-Ostseebahn did not want to accept the EC card, which, according to support, is due to the fact that the Number26 EC cards lack the Girocard/EC chip. However, this hardly detracts from my enthusiasm, because especially in America it was wonderful to be able to see in real time how much was going out of the account. Even after three days, my Miles and More credit card still doesn’t have all the bookings on the online account.
Another fintech I’m trying out right now is Scalable Capital. I cherish a (un?)healthy mistrust of the investment products recommended by banks and financial advisors, hidden costs are apparently a trivial offense, and I don’t even want to look into some of my contracts anymore because I simply had no idea when I was young. Cost transparency would therefore be a huge advantage when it comes to a new offer on the financial market. The fees at Scalable Capital are 0.75% of the invested assets plus an average of 0.25% costs for the ETFs, which are already included in the ETF prices of the providers. Wait a minute, fees for ETFs? Yes, ETFs also cost money, but usually less than an actively managed fund. But you would have paid these fees anyway, only that you might not have been aware of it. For 0.75%, everything outside the ETFs is paid, the custody account (which is often enough already available for free, just not at Scalable Capital’s cooperation partner, Baader Bank), the transactions, the brain that makes the decisions, and the salaries of the employees. Since Scalable Capital only takes on new customers from €10,000 in assets anyway, that’s at least €75 per year.
Let’s take a closer look at the “brain” that makes investment decisions, because that’s the really exciting part of this fintech. You can usually get something recommended by a financial advisor, and except for the few independent advisors who have hardly established themselves in Germany anyway, it is not unlikely that a commission will flow for the recommended product. Apart from the resulting costs, which the customer bears, the question arises as to whether the recommended product is actually the best product or whether the expected commission may not have played a role in the recommendation. And even if the financial advisor were not influenced by this at all, how can it be ensured that the best product is actually recommended? How does the financial advisor know? And how long will it remain the best product? How often does the consultant recommend that you restructure because the market has changed? If you don’t have a really high sum in your account, so that you can enjoy real investment advice, then the options for the average consumer are suboptimal at best.
So why not leave the investment decisions to an algorithm, a RoboAdvisor, which is not influenced by how much commission it receives? (Of course, this would also be technically possible… like a private auction in real-time bidding) And can also process much more information than a human is capable of? That is also scalable and does not prioritize according to the amount of assets to be managed? Actively managed funds, for example, don’t necessarily do better than passive funds, and as for the general thinking, well. Algorithms could be the better investment managers, and that’s the idea of Scalable Capital (besides the type of strategy, see below). The company will stand and fall with the performance of its algorithms. The basic principle here is that the algorithms have not been optimized for returns, but for the avoidance of losses, based on the fact that most models underestimate the risk of loss and overestimate the return potential (“asymmetry of positive and negative price developments”). The whitepaper on the website explains the principle very well. Not having to worry about it yourself anymore and being able to benefit from asset management that is otherwise only reserved for the really wealthy would be a second huge advantage. Plus, since Scalable Capital is allowed to manage assets itself, the transactions are also carried out for you. Others have already written a lot about how exactly it all works.
But to the first experiences. The account opening did not work as quickly as Number26. Although you can also register via video chat, it takes a good week until the account is actually opened and the initial investment amount is debited from the reference account and credited to the Baader call money account. Baader then also sent me a password for the website, which I couldn’t even read because it was printed so thinly that my access was blocked after three failed attempts. The telephone hotline was nice, but did not want to fix the problem immediately, and the callback did not come either. All in all, however, that worked out at some point. And then it takes a few days until money is debited from this account and the first papers are purchased. At least for me, not everything was invested immediately, but for two consecutive days, with still some money left over in the call money account. And at first, the value of my portfolio went down minimally, but as it is with such investments: first go to sleep. The DAX also went down during this period.
The app as well as the website are aesthetically and functionally designed, no frills, fast loading. The app only has informational value, On the website and now also in the app, you can initiate deposits and withdrawals and change the monthly savings rate. The portfolio shows exactly which products have been invested in, and there is absolute transparency here as well. For some reason I can’t take screenshots from the app, apparently that’s prevented by the app.
The portfolio is compared to an average portfolio, although it is not really clear how this average portfolio is structured. The help only says that it is a representative portfolio of the last 15 years, but where was this portfolio taken from? And what relevance does this information have? I can’t change my portfolio anyway.
Overall, Scalable Capital makes a good impression on me. It will take some time before the quality of the algorithms can be evaluated, from time to time I will give an update here.
Comments (since February 2020 the comment function has been removed from my blog):
Frieder says
February 2017 at 11:23 … I have made exactly 275 euros in profit from July 2016 to today with an investment amount of 20,000 euros in the medium risk strategy. There is no need to use an index comparison: A pathetic performance of the algorithms!!
It’s funny that Scalable is praised everywhere. I don’t need a service provider with a good press department.
Conclusion: I will take my money away there again in the short term!!
No recommendation!
Tom says
February 2017 at 10:41 Frieder, read the post again: invest and go to sleep For me it’s just 3.75%…
