Are projected return assumptions arithmetic means or geometric means?

Projected return assumptions are in geometric means.

They represent median projected returns, instead of average projected returns. The median return represents what one would be projected to obtain at least 50% of the time, whereas an arithmetic average would be projected to occur less than 50% of the time. Wealthfront chooses to use the geometric mean because it is the more conservative method.

For more details on our methodology, please log into your account and review the Path disclosures.

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