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Robo-advisers outperform in bear market: data

Robo-advisers, or digital algorithm-based wealth management services provided by investment firms, outpaced major indexes here last month, reflecting their ability to build a strong portfolio amid a bear market, data provided by a state-backed IT firm showed Tuesday.

According to the data compiled by Koscom, return rates for risk-seeking, risk-neutral and risk-averse investments made via robo advisors in August came in at 0.1 percent, minus 0.51 percent and minus 1.18 percent, respectively. The data involved 35 investments that used algorithms provided by robo advisors. 


In the same period, the nation’s benchmark Kospi shed 2.8 percent, while the secondary, tech-heavy Kosdaq declined 3.11 percent. The Kospi 200, which consists of 200 major companies listed on the main bourse, fell 2.76 percent.

On an annual basis, the performance of robo-advisers became more defined, with returns for risk-seeking, risk-neutral and risk-averse investments standing at 3.08 percent, 0.82 percent and minus 1.64 percent, respectively, on-year as of August.

The returns are noticeably higher than the corresponding figures for the full year beginning in August 2018 and ending in August 2019: Kospi’s minus 15.29 percent, Kosdaq’s minus 25.27 percent and Kospi’s minus 13.69 percent.

“It seems robo-advisers provided a relatively strong return rate in the bear market, as it was not emotionally influenced when the stock market plummeted over external risks, and was capable of carrying out diversified investments in both local and overseas equities,” a Koscom official said.

Koscom is the system manager of the nation’s bourse operator, the Korea Exchange.