While I partially agree with your robo vs index opinion, I feel as though you failed to mention the only two things that make robo a value proposition vs index funds. Tax loss harvesting and automated deposits/allocation.
Tax loss harvesting is by far the biggest value proposition robo has and papers I have read on the topic value it at anywhere from 10-100 bps (most times well exceeding the 25 bps charged). Taking your simple approach without factoring this in will obviously show that index funds perform better, because the actual holdings in robos are indexes and then charge a fee of 25 bps.
The other value proposition is automated deposits and allocations. If I were a robo investor I may find it worth it to lag a Vanguard index portfolio by 25 bps if it means having made regular deposits of several thousand dollars rather than having it sitting in my checking account for me to get around to it when I have the time (hint: you will never have the time).
I’d like to see your thoughts on how to value each of these value propositions and interested to hear your thoughts.
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