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Summary Good news from the robots. How the investments compare after 90 days. Other ways to pursue alternative investing. Good news from the robots The day SA published the last update in this series Betterment sent out a notice that was very welcome. Reading the robots’ tax harvesting policies one might conclude that those of us who are not investing $100K are being punished. The robots’ practice of telling the investor how large a savings was available made for an especially poignant longing for what might have been. After all, if they had the wherewithal to tell us a number, why not just apply it to our accounts. Happily, that is exactly what they decided to do. Early in April we Betterment investors received an email announcing the end of the $100K rule. And, within a week a similar announcement came in from WealthFront; although, WealthFront requires the client to opt in. For an account this small the difference will be negligible, but it gives the impression that there is some humanity in these robots. How the investments compare at the half This series began with an article explaining that on 23 January I had invested $10,090 in Betterment, WealthFront, and the Vanguard Total Stock Market ETF (NYSEARCA: VTI ), with the intention of documenting their comparative performance. Later we added in the Global X SuperDividend ETF (NYSEARCA: SDIV ) and the Vanguard FTSE Developed Markets ETF (NYSEARCA: VEA ). S o, this is how the five investments are doing at the half. Investment June 30 Closing Value Gain/Loss Betterment $10,068.26 -$21.74 -0.22% SDIV 10,168.67 78.67 0.77% VEA 10,569.99 479.99 4.54% VTI 10,180.43 90.43 0.89% WealthFront 9,932.29 -157.71 -1.59% Other Ways to Pursue Alternative Investing Our robo-advisors offer sort of a poor man’s approach to wealth management in which investors turn their assets over, not to a human advisor, but a robot asset manager. Firms offering this approach protest that human intervention is offered, but the basic premise is that investors get high quality automated asset management without the high fees associated with hiring a traditional asset manager. The algorithms employed by our robo-advisors are a refinement of an asset allocation model advanced in Modern Portfolio Theory over a half century ago. More recently proponents of behavioral economics have challenged the validity of this model. We began this experiment to determine empirically how well the model works. Because this model is generally available, variations have been offered for those who prefer a DIY approach to algorithmic asset allocation. One example, using the Zephyr AllocationADVISOR software, is found in a recent Seeking Alpha article titled Vanguard ETF Portfolio For The Moderate Investor. Two services that we have not researched thoroughly that are getting some attention are Personal Capital.com and Acorns.com. Additionally, traditional brokers are offering automated asset allocation services. Conclusion So far the robo-advisors have lost value and the other investments continue to gain. Still, we’re less that six months into the experiment, so it is too soon pick a winner. Disclosure: I am/we are long SDIV, VEA, AND VTI. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: The opinions in this article are for informational purposes only and should not be construed as a recommendation to buy or sell the investments mentioned. Scalper1 News
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