The costs

Cost is an important factor when choosing digital asset management. But cheap isn't necessarily better. What counts is the overall picture of return, risk and costs.

An important factor: the cost

As with any purchase decision, it is also important to consider the costs when investing. The lower they are, the less they nibble on the return. The Stiftung Warentest therefore recommends: "Investors who are interested in one of the new digital investment assistants should make sure that the proposed portfolio matches their risk conceptions - and that they must keep an eye on the costs."

The fees for digital asset management are made up of the administration costs on the one hand, i.e. for custody account maintenance, annual tax assessments and customer service, and the fund costs on the other.

Fund costs can vary significantly. Active portfolio management, in which fund managers and analysts make decisions about the composition of a fund, is usually more expensive than passive management, which relies primarily on index funds or ETFs (Exchange Traded Funds).

Why is that? Passive products usually replicate an index. An index fund on the DAX, for example, usually tracks all of the stocks that are included in this index - i.e. the 30 largest listed companies in Germany.

Active portfolio management is far more labor-intensive. Analysts constantly monitor a wide variety of market segments, they analyze balance sheets, economic and social trends, merger and acquisition plans and many other factors that can change the price of securities. With this information, fund managers select the papers that - depending on the investment objective - promise, for example, the best return or particularly low volatility.

Many robo-advisors use ETF portfolios to offer the product as cheaply as possible. But investors with such products have little chance of beating the index. You do not benefit from the many years of experience of fund managers and analysts. This can offer protection, especially in difficult market phases.

At Fidelity Wealth Expert, clients benefit from a global network of experts * that monitors the markets and selects securities. Fidelity takes on the strategic and tactical allocation, adapts the structure of the portfolio to the short and long-term trends in the economy and the markets. With a flat rate for asset management of 0.55 percent a year and an average of 0.67 percent fund costs, this solution is on par with many passive robo-advisors - and in some cases even cheaper. Active portfolio management is far more labor-intensive. 

* For Fidelity Wealth Expert, FIL Fund Bank uses the fund expertise of our capital management company FIL Fund Management (Ireland) Limited and the portfolio management expertise of FIL Investments International Limited.