baw703916 wrote:What are the five asset classes they added?
twist101 wrote:The Wizard wrote:I'd keep my eye on Expense Ratios within this company, Burton or no Burton...
Average expense ratios for ETFs there are 0.14%.
I don't have the latest edition of A Random Walk Down Wall Street,
(My bold.)Especially in the wake of the financial meltdown, readers will hunger for Burton G. Malkiel’s reassuring, authoritative, gimmick-free, and perennially best-selling guide to investing. With 1.5 million copies sold, A Random Walk Down Wall Street has long been established as the first book to purchase when starting a portfolio. In addition to covering the full range of investment opportunities, the book features new material on the Great Recession and the global credit crisis as well as an increased focus on the long-term potential of emerging markets. With a new supplement that tackles the increasingly complex world of derivatives, along with the book’s classic life-cycle guide to investing, A Random Walk Down Wall Street remains the best investment guide money can buy.
umfundi wrote:I don't have the latest edition of A Random Walk Down Wall Street,
No one should accuse Malkiel of consistency in his contemporaneous investment recommendations. It's as though the revisions in each new edition (now the tenth, I believe) are akin to a newsletter.
But it also had an chapter, some of the material from which survived into later editions, entitled "The Malkiel Method for Selecting Individual Common Stocks." (He looks for castles in the air built on firm foundations--that is, companies that have both good fundamentals and a romantic, exciting "story.").What we need is a no-load, minimum management-fee mutual fund that simply buys the hundreds of stocks making up the broad stock-market averages and does no trading from security to security in an attempt to catch the winners. Whenever below-average performance on the part of any mutual fund is noticed, fund spokesmen are quick to point out "You can't buy the averages." It's time the public could.
(He looks for castles in the air built on firm foundations--that is, companies that have both good fundamentals and a romantic, exciting "story.")
Another thing to note is that they removed US Government Bonds completely. It seems that at their Risk Tolerance level of 4, they used to put 50% US Government Bonds in each of taxable and tax-advantaged accounts.twist101 wrote:Wealthfront has added five income-producing asset classes to increase your portfolio returns without exposing you to more risk. The new asset classes are:
Treasury Inflation Protected Securities (TIPS)
Emerging Market Bonds
Dividend Growth Stocks
Burton Malkiel, the Princeton economics professor emeritus and author of the index investing classic “A Random Walk Down Wall Street,” had a lot to say about the perils of relying on U.S. Treasurys for income when IndexUniverse.com Managing Editor Olly Ludwig recently caught up with him.
Malkiel also talked about what Wealthfront, a Silicon Valley-based financial advisory firm where he now serves as chief investment officer, is doing about it. Wealthfront, which now manages $170 million in investments, doesn’t charge investors anything for the first $10,000 under management, and above that an annual fee of 0.25 percent, or $25 per $10,000, kicks in. The advisory firm was the subject of the March cover story of IndexUniverse's sister publication ETF Report.
Earlier this month, the firm, which serves up an algorithmic—and what Malkiel calls emotion-free—approach to index investing, added five new sources of income to its asset allocation options: municipal bonds, corporate bonds, emerging market bonds, dividend growth stocks and Treasury inflation-protected securities. Malkiel went out of his way to single out the highly prospective nature of emerging market credits, and also stressed his belief that China’s new leadership is laying the groundwork for slower and more sustainable growth.
Is there something new and revolutionary that Malkiel is suggesting that I'm missing? It all seems so routine to me. If I am missing something, then I must be the one getting old.
pascalwager wrote:The slide show has a picture of one of Rick's books. Maybe that's what makes it revolutionary.
I often wonder why Vanguard, Schwab, Fidelity, and other custodians have not created and launched a similar "robo" program. The automated rebalancing and tax-loss harvesting software that drives Wealthfront may be leading edge today, but how far ahead can you go with this stuff? Portfolio management processes are fairly generic (rebalancing, tax-loss selling). A large firm like Schwab could create a program in a few months if they wanted to - Vanguard also. They could offer this technology to premium clients at no-cost.
The large firms could even enhance the technology by giving you the ability to customize your portfolio where Wealthfront currently does not. Rebalancing could be based on your choice of methodology as well as tax-loss harvesting all with a few clicks. I'm surprised this service doesn't already exist.
Available as a complimentary service to investors with $50,000 or more in assets at Vanguard, Financial Engines helps you develop, refine, and implement your financial plan—a $300 value.
In-depth investment analysis, fund recommendations
Designed for investors at least five years away from retirement, Financial Engines helps you set realistic financial goals, establish or adjust your investment program, and forecast your chances of success. Your in-depth analysis takes into account all of your household investments and considers inflation, taxes, mutual fund expenses, and more. If your investment program is falling short, Financial Engines lets you try different assumptions until you come up with a plan you like. It even recommends specific funds that can meet your needs. As time goes on, you'll receive free checkups from Financial Engines to let you know how you're doing.
afan wrote:Rick, when you met with Rachleff, did he explain why he and the company had gone 180 degrees from championing active management, "Bogle did not have all the data", to a passive approach and extolling MPT? What happened to the people who had invested with the active managers Wealthfront used to represent? Thanks
It appears they're going to try and buy their first $1 billion in assets
brick-house wrote:As to Vanguard, I think the "robo" experiment was attempted via Financial Engines. Vanguard still offers Financial Engines. Many moons ago when the Financial Engines "robo" advice program was introduced to 401k participants. The thought/hype was this was going to be a revolutionary offering - I mean who wouldn't a William Sharpe portfolio using Vanguard products. In the real world it was a dud - the Financial Engines utilization and adoption rate was very low. Not sure if the usage rate ever picked up...
https://personal.vanguard.com/us/insigh ... al-engines
I don't believe Burton Malkiel is picking them. He has always been enthusiastic about REITS, and the 2012 edition of A Random Walk Down Wall Street still says "I believe that ... some part of one's equity holdings should be in real estate investment trust (REIT) index mutual funds."Rick Ferri wrote:[They are generic allocation choices; US stocks, international stocks, corporate bonds, etc. You'll find these in every asset allocation book including my own. But, Burton Malkiel is picking them, so I guess that's supposed to mean something special.
nisiprius wrote:Burton Malkiel has always been enthusiastic about REITS, and the 2012 edition of A Random Walk Down Wall Street still says "I believe that ... some part of one's equity holdings should be in real estate investment trust (REIT) index mutual funds."
I misunderstood, then. You're saying they still use REITS in tax-advantaged accounts?Rick Ferri wrote:The change was to take REITs out of taxable accounts and to replace taxable bonds with municipal bonds (at least for investors in a high tax bracket).nisiprius wrote:Burton Malkiel has always been enthusiastic about REITS, and the 2012 edition of A Random Walk Down Wall Street still says "I believe that ... some part of one's equity holdings should be in real estate investment trust (REIT) index mutual funds."
Sam I Am wrote:Judging from the horror stories new posters often bring to this forum, I'd say an investor could do a lot worse than investing via Wealthfront.
I'm not interested in using them, but I have to believe being able to say to your friends, "I invest with Wealthfront" might be considered pretty sexy by some. Has a nice ring to it, no?
If the company can pull people away from investing in high-load mutual funds, and active management and such, at the end of the day their clients should be much better off, I think.
Gets them to a better place, closer to the best place. That might be fine for a lot of folks that just don't want to fool with their investments. Might be as far as a lot of people will ever go.
Sam I Am
I don't think that "l-th-f-r" combination exactly trips off the tongue. That's a lot of consonants without any vowels in between. In fact at first I thought it was unpronounceable. Try it. The first few times I tried it, it either came out "Wellfront" or "Wealthaffront." It's possible, but if you want to impress your friends you need to pay attention to what you're doing and practice to get a smooth transition from the th to the f. I'll bet even Andrew Rachlin can't say it ten times quickly.Sam I Am wrote:I'm not interested in using them, but I have to believe being able to say to your friends, "I invest with Wealthfront" might be considered pretty sexy by some. Has a nice ring to it, no?
They sure look real. I think I have an OK eye for stock photographs, and it would be awfully creative of them to louse up the color balance, exposure, composition, etc. just to make them look authentic.Rick Ferri wrote:PS. They also have dozens of individual client pictures on their splash page. This is odd to see because the SEC strictly forbids client endorsements as advertising. Maybe these people aren't real clients - I don't know.
nisiprius wrote:They sure look real. I think I have an OK eye for stock photographs, and it would be awfully creative of them to louse up the color balance, exposure, composition, etc. just to make them look authentic.Rick Ferri wrote:PS. They also have dozens of individual client pictures on their splash page. This is odd to see because the SEC strictly forbids client endorsements as advertising. Maybe these people aren't real clients - I don't know.
But in case you didn't notice, actual names pop up when you mouse over the picture. For example (!) Noah Knauf, Principal, Warburg Pincus (!). (Do you think he has all of his wealth managed by Wealthfront?) It's easy to Google for him and find other pictures of him, e.g. from the Damon Runyon Cancer Foundation, and they look the same to me. So does the picture of Damien Fillatraut, CEO of Scalable Path--in this case, the image used by Wealthfront actually looks like the same image at Scalable Path's own website
I think these are real pictures that match up with real names of real people. Of course they could be fibbing about these people being Wealthfront clients, but, if so, wouldn't that be an issue?
(Duh! )tj wrote:there's a long disclosure, you can click the link and it pops up in a box...its underneath the bottom row of photos.