Has anyone tried the investment solutions offered by Robo-Advisors ? I tried the following with a demo account: 1. WealthFront.com 2. Betterment.com 3. WealthVenue.com 4. FutureAdvisor.com They all seem interesting even though they tend to propose the same kind of ETFs. Anyone with actual trading experiences with them ?
You can just as easily buy these ETFs through any number of beta providers. Rob (Ron?) Arnott came out a few weeks ago and lambasted the strategy, calling it a crowded trade basically. "The only way for strategy to become successful is to go from expensive to really expensive."
Traders don't have the monopoly on ETFs, plenty of individual investors buy ETFs for their personal savings Buying at the Bid ? the point of ETFs is not to play the spread, but being exposed to the long term performance of certain asset class or investment style. Buying at the bid should be the last of your worry. What purpose will it serve when you are buying the wrong asset class at too high a price.
I think everyone has smart beta ETFs now. Blackrock, DFA, etc etc. Providers of smart beta ETFs. Beta providers.
From an investment point of view- The advantage of Robo funds are the very low costs and asset diversification they may offer-and the disciplined and unemotional approach- particularly over a longer term . Years-and not months. After listening to John Bogle via Vanguard & You tube videos- I looked closer at the expense ratios and added costs (12-b-1 & other) as well as the commission structure of our company sponsored IRA and realized I was paying higher fees that could be achieved at a much lower cost . I considered Betterment & Wealthfront at that time- but don't recall all the specific details. With a Robo firm, the automated strategy should include a diversified asset allocation, periodic account rebalancing -adjusting the asset allocations as necessary- perhaps (quarterly) .and very low fees- I,m not sure how much personal hand holding or advice is available . After a year + of indecision, and holding a larger cash allocation in the account, I chose to shift some assets into a Vanguard account with no commissions or Vanguard funds- and shifted some assets to a financial advisor that assures me he acts as a Fiduciary- I met with several such advisors- and in the end decided I would invest a portion of my limited assets with an active Advisor that set up a diversified bond and ETF allocation (mostly Vanguard ETF's) with quarterly review- adjust the allocation as needed, a specific bond component they select (Not a bond etf) and it comes with a phone call every quarter to discuss performance and changes they intend at a minimal $7 trade execution cost. This "handholding" is not Free- Comes with an annual expense ratio based on the account value of a total 1.25%. At this time, I feel that the adviser is earning their fee simply based on the amount of time the quarterly review and reallocation takes-plus they Own the specific bond components directly-not through a general bond fund. Additionally, by talking with an actual financial planner as opposed to a stock-broker- I feel I dealt with a Fiduciary advisor as opposed to a salesperson. This is the Essential difference that one has to challenge and distinguish if seeking outside advice. The Fiduciary should give guidance that puts the investors interests ahead of their own . (an example might be recommending a fund that has better returns for the investor vs a fund that the adviser gets a commission up Since I am near retirement, i feel the personal advice & input i received is worth the slightly high management fee. If I was in my 40's - I would elect to employ the least expensive diversified and uncorrelated approach. I would max out any company match- match out any Roth account available next, and never pay any mutual fund load commissions . Whatever course you choose, will benefit you if you have a decade or two ahead of you. Your experience and skill set may be different than mine- I find that having a separate Investment plan and maxing it out first has proven to be the best course of action- and any trading is conducted separately. Tough to not let the one influence the other. By far- for me personally- the investment side has been the best approach vs trading and timing the market. That may not be true for others- but -just in case- I would recommend that Plan A should be the solid regular investment plan- maxed out- diversified low cost allocations- (Vanguard) and Plan B is the alternate fund that one trades and tries to grow faster than the diversified investment account year after year. I think the question you presented initially " Has anyone tried the investment solutions offered by Robo-Advisors ?" Key word being investments. My experience suggests that one needs to max out the investment portion first-and a low cost approach is prudent. Take out the individual emotional tendencies to react at the wrong times and you significantly improve results. Thus, an automated approach that is not emotional eliminates the need for emotional intervention which seldom works effectively. Do your comparisoms of costs and rebalancing and asset diversification- PS- Andrew Solin had a pretty easy concise book on asset allocation- Quick read for $10-good primer on developing a basic market approach with a view to Risk. Good luck. Invest often- just like voting!
ok you mean ETF sponsors, and sub-advisors to ETF strategies yes, they all seem to overlap, you can add SSGA to this list Beta ETFs are plently but it's how you put them together that is really interesting, not the instrument alone by itself
I don't really have an opinion. You're betting on various fundamental factors outperforming. I have a bias toward large cap and value, but value hasn't performed well for the past several years. I'm also not sure as to how much turnover there is in these things. But good luck!