What does rules-based investing mean?

Wealthfront exclusives (US Direct Indexing and Smart Beta) are investment services based on rules that are rooted in academic research and have withstood the test of time. They aim to deliver clients more value on an after-tax, after-fee, risk adjusted basis than buying and holding an index fund.

In every decision, we consider what's best for our clients (the industry calls this the "fiduciary standard"), so when we consider which investing strategies to offer to our clients, we look for strategies that are:

• Based in academically-sound, peer-reviewed research published in reputable academic journals
• Shown to deliver statistically-significant economic value to clients in the real-world over multiple years
• Can be automated through software and delivered at little-to-no incremental cost to the client

Our research team uses these criteria to identify highly effective strategies, and works with our investment advisory board to decide which will best serve our clients. And through a software-driven approach, we constantly look for opportunities to automate these strategies to make them available at the lowest cost possible for our clients.