Find Out How Robo-Advisors Diversify Your Investments

In the bond asset classes, Personal Capital includes the typical corporate and inflation-protected bonds. They also offer international bonds as do several other automated investment platforms.

Personal Capital deviates from the commonplace by offering an alternatives asset class that includes the following sectors:

  • Real Estate
  • Gold
  • International Real Estate
  • Energy
  • Food
  • Metals

Betterment

Betterment, a goals-based robo-advisor sticks to the more typical financial assets. The company recently launched a tax smart asset location option for their investors to accompany their internationally diversified investment options.

The Betterment investment choices span diversified U.S. stock and bond ETFs without any "alternative" asset classes. The stock asset choices include broadly diversified U.S., developed and emerging markets international funds. Seeking to exploit the value market anomaly, Betterment includes U.S. large, mid and small cap value ETFs.

Betterment offers broader diversification in the bond sector than many of its competitors with munis, Treasuries and corporate bonds along with several international bond funds. The international bond ETFs include both developed and emerging market international bond ETFs, a unique addition to the typical robo-advisory ETF offerings.
 


Wealthfront

Wealthfront, another low-fee robo-advisor with a wide slate of ETF options differs somewhat from its competitors by adding sector real estate and natural resources ETFs. Their vanilla stock ETFs are flavored with a dividend appreciation ETF, unlike many of the company's peers. The Wealthfront bond diversification options include typical government, corporate and munis along with a foreign emerging market bond fund.

In the final analysis, although the robo-advisory landscape is frequently discussed as if it were uniform, it isn’t. From various definitions of conservative, moderate and aggressive investors to opportunities for diversification, the robo-advisor field is diverse. Before turning your investing over to a digital algorithm, understand whether the robo-advisor’s underlying individual investment choices are in line with your diversification preferences.

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Disclaimer: I am a portfolio manager, former ...

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Barbara A. Friedberg 4 years ago Author's comment

Thanks Danielle, I'll check it out. I've thought about that topic myself.

Danielle Rogers 4 years ago Member's comment

Interesting piece, thanks. You'd probably like the recent post by Cullen Roche, "Have We Reached Peak Robo Advisor?" www.talkmarkets.com/.../have-we-reached-peak-robo-advisor