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What is Wealthfront's investment strategy?

Our investment management team, led by Dr. Burton Malkiel, renowned economist and author of A Random Walk Down Wall Street, designed a software-based service that starts with a portfolio diversified across relatively uncorrelated asset classes, customized for your particular risk tolerance. We invest with an equity orientation seeking to maximize long-term returns. Each of our selected asset classes is primarily represented by a low cost, passive ETF. Using software, we continuously monitor and periodically rebalance your portfolio seeking to maximize your chance of investment success for the long run. Our software also attempts to minimize your taxes by analyzing the taxes likely to be generated by any given asset class, and then allocating different asset classes in taxable and non-taxable (retirement) portfolios.

We use Modern Portfolio Theory (MPT) to identify the portfolio that has the maximum expected return for your chosen level of expected risk. The economists who developed MPT, Harry Markowitz and William Sharpe, received the Nobel Prize in Economics in 1990 for their groundbreaking research. Today, MPT is the most widely accepted framework for managing diversified investment portfolios. MPT has its limitations, especially in the area of very low probability significant downside scenarios, but we believe it is the best framework on which to build a compelling investment management service.

To give your investments a further edge, Wealthfront created PassivePlus®, our signature suite of investment features designed to deliver more returns without more expected risk. PassivePlus includes Tax-Loss HarvestingDirect Indexing, and Advanced Indexing.

For more details on our investment strategy please read our Investment Methodology white paper.  For a description of the risks associated with our investment strategy, please click here.  

 

PassivePlus® is a registered trademark and property of CSSC Investment Advisory Services, Inc. (“CSSC”) and is used under license. CSSC and Wealthfront are not affiliated companies.

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.

PassivePlus® is a registered trademark and property of CSSC Investment Advisory Services, Inc. (“CSSC”) and is used under license. CSSC and Wealthfront are not affiliated companies.

This article is not intended as tax advice, and Wealthfront does not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should confer with their personal tax advisors regarding the tax consequences based on their particular circumstances. Wealthfront assumes no responsibility for the tax consequences to any investor of any transaction. Investors and their personal tax advisors are responsible for how the transactions in an account are reported to the IRS or any other taxing authority.

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