{"id":3584,"date":"2013-03-05T08:00:34","date_gmt":"2013-03-05T16:00:34","guid":{"rendered":"http:\/\/canary.kcprod.info/blog\/?p=3584"},"modified":"2022-01-11T17:12:43","modified_gmt":"2022-01-12T01:12:43","slug":"tax-efficient-investments","status":"publish","type":"post","link":"https:\/\/canary.kcprod.info/blog\/tax-efficient-investments\/","title":{"rendered":"Wealthfront&#8217;s New Investment Mix"},"content":{"rendered":"<p>At Wealthfront, we\u2019re always looking for ways to increase our clients\u2019 <b>net-of-fees, after-tax returns<\/b> without exposing them to more risk.\u00a0 We\u2019re excited to announce two major enhancements to our investment management service, <a title=\"Burt Malkiel on Wealthfront's Promise\" href=\"https:\/\/canary.kcprod.info/blog\/tax-efficient-asset-classes-location\/\" target=\"_blank\" rel=\"noopener\">driven by Chief Investment Officer Burt Malkiel<\/a>:<\/p>\n<ul>\n<li><b>Differentiated Asset Location<\/b>: We now offer different asset allocations for taxable and retirement accounts. Tax-efficient asset classes are weighted more in taxable accounts to minimize your taxes.<\/li>\n<li><b>Improved Bond Diversification<\/b>: We\u2019ve added five new income-producing asset classes to help increase returns (for the same level of risk).<\/li>\n<\/ul>\n<p>We estimate these changes will increase our clients\u2019 annual net-of-fees, after-tax return by an average of 0.5% per year. Assuming you invest $100,000 over 20 years, the changes could add approximately $28,000 to your account\u2019s value.<\/p>\n<p>Our fees remain 0.25% of assets. Unlike traditional financial advisors, we don\u2019t raise our fees when we offer a new feature. We aim to continually deliver more bang for the buck.<\/p>\n<h2>Differentiated asset location: Taxes matter<\/h2>\n<p>Many of our clients have told us they\u2019re worried about the impact of rising taxes. To minimize taxes on your investment portfolio, we have implemented <b><i>differentiated<\/i> asset location<\/b>. That means we employ different mixes of asset classes for your taxable and retirement accounts.<\/p>\n<p>Previously, we used the same asset classes and mixes for both taxable and retirement accounts. By placing tax-efficient asset classes \u2013 including stocks and a newly added asset class, municipal bonds \u2013\u00a0in our taxable accounts, we aim to minimize your tax bills and increase your after-tax returns. We continue to use low-cost ETFs to represent all of the asset classes across your portfolio.<\/p>\n<p>You can see the differences in the asset allocations for taxable and retirement accounts by toggling between the two new account type tabs on the <a href=\"https:\/\/www.wealthfront.com\/plan\">investment recommendation page<\/a>.<\/p>\n<p>The charts below display the before and after asset allocations for each account type for every level of risk:<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/canary.kcprod.info/blog\/tax-efficient-investments\/\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-3600\" title=\"Wealthfront's Tax-Efficient, Diversified Investment Asset Location\" src=\"https:\/\/canary.kcprod.info/blog\/wp-content\/uploads\/2013\/02\/after-before_blogpost-r6.png\" alt=\"Wealthfront's Tax-Efficient, Diversified Investment Asset Location\" width=\"528\" height=\"662\" \/><\/a><\/p>\n<h2>Improved bond diversification: Higher returns<\/h2>\n<p>Wealthfront has added <b>five income-producing asset classes<\/b> to increase your portfolio returns without exposing you to more risk. The new asset classes are:<\/p>\n<ul>\n<li>Municipal Bonds<\/li>\n<li>Corporate Bonds<\/li>\n<li>Treasury Inflation Protected Securities (TIPS)<\/li>\n<li>Emerging Market Bonds<\/li>\n<li>Dividend Growth Stocks<\/li>\n<\/ul>\n<p>Each asset class has a different set of risk, return and tax characteristics, so adding them gives us more ability to customize portfolios. Not every account will include all of the 11 asset classes we now use; a different subset of the asset classes will be used depending on account type and each client\u2019s tolerance for risk. To read more about the rationale behind our changes please see our blog post, <a href=\"https:\/\/canary.kcprod.info/blog\/tax-efficient-asset-classes-location\/\">Burt Malkiel On Wealthfront&#8217;s Promise<\/a>.<\/p>\n<h2>New allocations available immediately<\/h2>\n<p>As\u00a0of today, all new clients will be offered portfolios that include the\u00a0enhancements. \u00a0If you&#8217;re already a client, you&#8217;ll see a popup when you\u00a0<a href=\"https:\/\/www.wealthfront.com\/\">log in<\/a>\u00a0that offers an opportunity to upgrade. Start the process by clicking the &#8220;I want this now!&#8221; button.<\/p>\n<p>Rest assured we will migrate portfolios to the new allocations in a tax-sensitive manner. Please see our <a href=\"https:\/\/support.wealthfront.com\">FAQ<\/a> for specific details on how we accomplish this goal.<\/p>\n<h2>The advantages of a software solution<\/h2>\n<p>Our investment methodology, based on Modern Portfolio Theory, hasn\u2019t changed. Our low fee hasn\u2019t changed, either: It remains 0.25% of assets. Most importantly, we remain committed to our mission of bringing high-quality financial advice to everyone.<\/p>\n<p>Our software-based approach means we are able to continually improve the financial advice we offer. We will be relentless in this pursuit. You can expect us to make additional improvements that:<\/p>\n<ul>\n<li>Offer new capabilities traditionally only available through private wealth managers<\/li>\n<li>Take advantage of the latest research on investing and<\/li>\n<li>Address changes in the economic environment<\/li>\n<\/ul>\n<p>Please read our <a href=\"https:\/\/research.wealthfront.com\/whitepapers\/investment-methodology\/\">white paper<\/a> if you would like to learn more about how software enables us to maximize our net-of-fee, after-tax returns while we keep our fees low.<\/p>\n<p>Thanks for entrusting us with your investments.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>At Wealthfront, we\u2019re always looking for ways to increase our clients\u2019 net-of-fees, after-tax returns without exposing them to more risk.\u00a0 We\u2019re excited to announce two major enhancements to our investment management service, driven by Chief Investment Officer Burt Malkiel: Differentiated Asset Location: We now offer different asset allocations for taxable and retirement accounts. Tax-efficient asset [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7217,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1282],"tags":[1390,1302,1304,1339,1299,1294],"coauthors":[523],"class_list":["post-3584","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-asset-allocation","tag-diversification","tag-diversified-portfolio","tag-wealthfront-product-release","tag-passive-investing","tag-taxes"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Wealthfront\u2019s Tax-Efficient Investment Portfolio<\/title>\n<meta name=\"description\" content=\"Wealthfront announces a new investment portfolio introducing differentiated, tax-efficient asset location and improved bond 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