Beginning life in 2012 in Italy, the story of Moneyfarm has been one of continual progression and steady growth. The business was, and still is, driven by a simple vision – personal investing should be simple and accessible to help anyone improve their financial wellbeing. It’s on this core principle that Moneyfarm has developed into the international business it is today.
In 2016, this vision was brought to London. Now, five years on, this feels like a good time to reflect on our journey so far and the success of our model in the UK. Half a decade and 50,000 investors later, let’s take a look at the milestones we’ve hit and the performance of our investments over time.
When we started out in London, we were up against some serious competition and faced the challenge of expanding the business while keeping its core values consistent. Five years on, we can look back at a period of successful growth and celebrate what is a firmly established business. There have been some key moments and milestones along the way.
In July 2018, for example, we were voted the ‘Best Online Direct to Consumer Investment Platform’ in the YourMoney.co.uk awards. The following year, our private pension won the UK’s ‘Best Direct SIPP 2019’. We’ve been recognised in a few different categories since then, too, like Best Digital ISA and Best Customer Service.
2020 was, without a doubt, an incredibly challenging year, with the spread of Covid-19 and the resultant lockdowns affecting the lives of just about everyone. For Moneyfarm as a business, however, it was another positive period and included some significant milestones that we take great satisfaction in highlighting.
In May 2020, we reached £1 billion in assets under management. Then, a few months later, in August, we reached 50,000 active investors. For this many people to have entrusted such a momentous amount of wealth to us is a marker of vindication for not only our founding vision but also our success in making that vision a reality.
How our portfolios have performed
Ultimately, the success of any wealth manager lies in the performance of its portfolios. You can create a frictionless, well supported, affordable service, but without strong performance underpinning everything, it won’t provide true value. Regardless of the investor’s chosen level of risk, a portfolio needs to show growth.
This is also, incidentally, the most difficult part of wealth management! It’s the reason people entrust their money to experts and our portfolio management team monitors progress every day to ensure that our investments are on track. We recently created an in-depth rundown of our investment strategy from start to finish, from how we identify opportunities to how we analyse their success rate – you can read the full document here.
The chart below tracks the performance of four of our portfolios since our inception in 2016. The blue line maps one of our relatively low-risk portfolios, the orange and green lines represent two of our medium, while the red line represents our highest-risk portfolio.
When most people invest, they do it to protect and grow their wealth. Of course, investors want maximum returns, but the fundamental goal is to outperform cash by beating interest rates. By doing this, the real value of savings is protected and grown over time, where otherwise it might be eroded by inflation and a low interest rate environment.
As you can see from the chart below, the pandemic has meant that the (already relatively sluggish) interest rates for cash have been slashed. The current base rate in the UK, as set by the Bank of England, is just 0.1%. In this environment, it’s more important than ever that investors have straightforward, accessible options for maintaining and growing their wealth over the medium and long term.
The next five years
So, with five years already under our belt, let’s look ahead to the coming five. For Moneyfarm as a business, we will continue to shake up the asset management industry. We’re constantly developing our product, making improvements to our software and reviewing our asset allocation process to ensure that we’re ahead of the curve.
ESG is likely to be important to Moneyfarm going forward. Increasingly, investors are looking for more ethically-focused ways to protect and grow their wealth, particularly in the wake of the global disruption caused by Covid-19. Our ESG proposition has been in the works for some time and we should have the product live before the end of 2021 – keep an eye out for updates over the next few months.
As ever, our approach will always be focused on the medium and long-term horizon. We are firm in our belief that sound investing is proactive, not reactive, and that the most consistent way to protect and grow wealth is to do so over time. We will continue to develop our product, make changes to our portfolios where necessary, and make investing as simple and accessible as possible for our 50,000+ investors.