Wealthsimple has a lot to offer as a robo advisor – you can get a diversified investment portfolio set up according to your risk level and choose from a variety of investment types.
We compare Wealthsimple with Questwealth and Justwealth to see each outfit’s ability to offer balanced portfolios across investing platforms. Whether you’re a hands-off investor or someone looking for low-cost financial management, understanding the differences between these platforms can help you make an informed choice.
We break down the numbers so you can evaluate and decide if Wealthsimple's performance fits your goals.
Key Takeaways
- As a robo advisor, Wealthsimple offers investors the opportunity to invest in a diversified investment portfolio with lower fees than you’d pay a human investment advisor.
- Wealthsimple's 1-year returns on balanced portfolios fall between those of Questwealth and Justwealth.
- Wealthsimple's fees aren't the lowest out there, but its minimum investment requirement of just $1 can balance this out.
Is Wealthsimple portfolio performance the best in Canada?
Wealthsimple was one of the first robo portfolios on the Canadian market. It offers competitive products and services, but its performance in 2024 was middling, falling somewhere between Questwealth and Justwealth's performance.
The chart below is based on a balanced portfolio from each of the services listed:
| Robo Advisor | MER | Management fee | 1 Year Return | Return Since Inception |
|---|---|---|---|---|
| Wealthsimple managed investing | 0.12% - 0.42% | 0.5% | 6.8% | 65.1% (2014) |
| Questwealth | 0.17% - 0.35% | 0% - 0.25% | 22.19% | 81.38% (2014) |
| Justwealth | 0.18% | 0.4% - 0.5% | 13.78% | 8.35% (2016) |
1 year portfolio performance comparison
The past year, or even the past 20 months (from when this article was last updated) have seen inflation-influenced market turbulence, followed by a rebound.
Over the last 12 months, Wealthsimple’s balanced portfolio returned a reasonable 6.8% – pretty close to its 5-year average of 7%, as the Globe & Mail reported earlier in 2024.
Wealthsimple’s 1-year return is impressive and significantly higher than Justwealth's. Still, it's still not nearly as high as the Questwealth's 1-year numbers.
At the time of our last update in 2023, inflation was high and all three robo-advisors posted negative returns. But Wealthsimple’s was by far the most palatable return, registering at just over -5%.
Return since inception comparison
For returns since inception in 2014, Wealthsimple’s balanced portfolio has generated significant returns registering at 65.1%.
This sits below Questwealth, which has delivered even stronger returns at 81.38% since the portfolio’s inception in 2014.
Justwealth trails both considerably, registering an 6.21% return since the portfolio’s 2016 inception.
Robo advisor fee comparison
All three investment companies charge within an expected range for robo advisor services. They’re all well below the traditional portfolio management fee of roughly 2%.
These fees are based on a sliding scale, so it’s important to compare who’s most competitive for the size of portfolio you have.
| Investment Size | Wealthsimple | Questwealth | Justwealth |
|---|---|---|---|
| $1,000 | $5 | $2.50 | N/A |
| $10,000 | $50 | $25 | $50 |
| $100,000 | $400 | $200 | $500 |
| $1,000,000 | $4,000 | $2,000 | $4,000 |
Looking at the table above, Questwealth leads with the lowest fees, followed by Justwealth’s reasonable fees and Wealthsimple’s costly charges
It’s clear that Questwealth is ahead in all areas – although they do require an account minimum of $1,000 which can be a determining factor for many would-be investors.
Justwealth has a point of entry of $5,000.
But with Wealthsimple, you can start investing with only $1. This makes them an especially attractive option for new investors.
What is a portfolio investment? The Wealthsimple example
A portfolio investment is passive ownership of stocks, bonds, or other assets, usually compiled into an Exchange Trade Fund (ETF) or something similar.
The idea behind a portfolio investment is that it grows over time in a passive manner.
How a robo advisor works
Robo advisors work on a few levels:
- They help you realize your risk tolerance
- They’ll use your risk tolerance to create a portfolio for you
- They use an algorithm to manage the investments held in your portfolio
The algorithm makes adjustments to your portfolio as needed, like a fund manager would. But since it’s not an actual person doing this work, the robo advisor’s fees are significantly lower.
Wealthsimple was one of the first places in Canada to offer robo advisors. Founded in 2014, Wealthsimple’s philosophy merges financial expertise with cutting-edge technology.
Like other robo advisors, Wealthsimple offers a user-friendly quiz to evaluate your risk tolerance as an investor.
From there, Wealthsimple tailors an investment portfolio that’s low, medium, or higher volatility. The resulting portfolio is composed of financial assets purchased through ETFs. Once this is in place, the algorithm works to provide solid returns over time.
What should you look for in a portfolio investment?
Aside from looking at each potential investment company as a whole, there are five key metrics to keep in mind when looking for a portfolio investment:
- Portfolio performance: Past earnings and how the portfolio functioned during difficult economic times can indicate future performance. Much of a portfolio’s performance focuses on long-term growth, with diversification being key.
- Fees: The best robo advisors don’t charge a commission on trades. Management fees are calculated as a percentage of the assets it manages for you.
- Ease of use: The whole point of a robo advisor is to make investing easy. The best ones make depositing funds, reinvesting dividends, and rebalancing your portfolio feel seamless.
- Account minimum: This can range from $1 (Wealthsimple) to $1,000 (Questwealth) or more. If you’re a new investor, this account minimum may hold you back from choosing certain companies or robo options for building your portfolio.
- Customer service: Being able to work through any issues with a person, as opposed to a chat bot, is essential when dealing with money matters.
Investors who take some risk to gain rewards have portfolio makeups similar to the chart above.
Growth portfolio
A growth portfolio invests more heavily in equities than bonds, making it more vulnerable to market fluctuations.
A makeup of 20% bonds and 80% equities is common, as seen in the chart below.
Pros and cons of portfolio investment
| Pros | Cons |
|---|---|
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Wealthsimple alternatives
Aside from Questwealth and Justwealth, there are many other non-Wealthsimple robo advising options out there. Here are a few alternatives to check out:
| Alternative | Notable features |
|---|---|
| RBC InvestEase | * Will invest small sums * Responsible investment options * NOMI Insights tool |
| CI Direct Investing | * Access to private assets * Team of financial advisors * Clean technology opportunities |
| Next Wealth Direct | * Straightforward fee structure * Solid track record * Partnerships with human advisors |
The bottom line: Does Wealthsimple have the best performance?
Wealthsimple offers competitive performance overall, even if its returns aren’t the highest. Questwealth currently offers higher returns.
That said, it’s entirely possible that Wealthsimple will surpass Questwealth’s returns at some point.
FAQ
What's a portfolio investment?
A portfolio investment is a collection of financial assets. It can contain a range of investments from around the globe, including stocks, bonds, REITs, and more. This collection is managed passively and grows with time.
Is Wealthsimple’s portfolio performance the best?
Choosing a portfolio is a personal decision, but when it comes to variety and results, Wealthsimple portfolio performance is one of the most competitive options in Canada for building investment portfolios.
How does Questwealth portfolio performance compare?
Questwealth had higher overall returns compared to Wealthsimple and Justwealth, but outperformed both when it came to 1-year returns, as of October, 2024.
Should I use Wealthsimple?
Choosing a financial service, including a robo advisor, always comes down to personal preference. Do the research, ask people you trust for advice, consider what your investment goals are, and make the best decision you can.
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