Let experts help. Manage your investments with us.

Category: Portfolio Management Tags: , ,

Interesting study from Wealthfront, noting that only 8% of linked accounts in 2015 were built properly. Most suffered from excessive fees, insufficient diversification, and heightened risk.

…Over the course of the year, Wealthfront was able to analyze data on their investors’ portfolios before they were transferred.

…Just 8% of the investment portfolios linked to the company so far in 2015 were built properly, says CEO Adam Nash. The rest were challenged by a combination of high fees, poor diversification and excessive risk.

Wealthfront saw that 35% of their investors were holding at least 10% of their portfolio in cash. Nash says investors are likely foregoing much in the way of returns by gravitating toward the safety of cash. “In the short term you may have cash needs and we even advocate that young people have an emergency fund for unexpected expenses or a change in employment,” he says. “Now over the long term — 10, 20, 30 years — having a significant portion of your portfolio in cash really lowers the returns that you can expect, especially if you’re planning for a long-term goal like retirement.”

Another alarming finding: One-third of Wealthfront’s investors were overly concentrated in U.S. equities, and hold just one or a handful of stocks.

Wealthfront CIO and renowned economist Burton Malkiel cautions that investors need to ensure they aren’t too fixated on return that they overlook risk. “Diversification is really one of the only free lunches there is in investing. That with a broadly diversified portfolio, you can get a reasonable return and lower your risk as much as possible. And broad diversification is well known as a technique that lowers risk,” he says.


We want to help you simplify your life and prepare for the future

    Map of Martinsville area around Condor Capital location

    1973 Washington Valley Road
    Martinsville, NJ 08836
    (732) 356-7323