Wealthfront Mutual Funds Review and Guide

Wealthfront offers a range of low-cost index funds and ETFs through its robo-advisor platform.

These funds are designed to track the market's performance, providing broad diversification across various asset classes.

Wealthfront's investment strategy focuses on tax-efficient investing, using techniques like tax-loss harvesting to minimize taxes owed on investment gains.

By keeping costs low and investing in a diversified portfolio, Wealthfront aims to help users achieve their long-term financial goals.

Wealthfront offers a variety of account types, including individual and joint brokerage, Roth and traditional IRA, rollover IRA, simplified employee pension (SEP), trust, and 529 plan accounts.

You can also invest directly in over 1,500 stocks through your Wealthfront account, making your own investment picks to go with the robo-advisor portfolio.

One of the unique features of Wealthfront is its cash management account, which comes with an interest rate of 4.00% APY and a debit card that offers free withdrawals at over 19,000 ATMs.

Here are the account types offered by Wealthfront:

Wealthfront also offers a range of account services, including automatic rebalancing, reporting features, tax loss harvesting, and external account syncing/consolidation.

To pick the best robo-advisors, Investopedia sent a digital survey with 64 questions to 21 companies, which is a huge undertaking. The survey was sent from January 8 to February 9, 2024.

Our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. This process took a lot of time and effort.

We then developed a quantitative model that scored each company to rate its performance across nine major categories and 59 criteria. The score for each company's overall star rating is a weighted average of the criteria.

The nine major categories and their corresponding weights are:

Some robo-advisor companies even granted our team access to live accounts so we could perform hands-on testing, which was really helpful.

You can open an account with us in various types, including individual and joint brokerage, which allows two or more people to share ownership and management of the account. This type of account is great for couples or business partners.

We also offer IRA accounts, specifically Roth and traditional IRA, which are designed to help you save for retirement. Additionally, you can open a rollover IRA, which is used to transfer funds from an old employer-sponsored retirement plan to an IRA.

Another option is the eligible 401(k), which is a type of retirement plan that allows you to contribute pre-tax dollars to your account.

Wealthfront offers a range of account services that can help you manage your finances more effectively. You can invest directly in over 1,500 stocks through your Wealthfront account, giving you more control over your investments.

The cash management account offered by Wealthfront comes with an interest rate of 4.00% APY, which is a decent rate compared to some other accounts. It also comes with a debit card that allows you to make free withdrawals at over 19,000 ATMs.

Wealthfront Borrow is another feature that lets you borrow against the value of your investment account through a line of credit. This can be helpful if you need access to cash for unexpected expenses or other purposes.

In contrast, Vanguard Personal Advisor is more limited when it comes to account services. You can set up automatic deposits from an external account, but traditional banking options are not available. Borrowing on margin is also not available through digital investment accounts.

Here's a comparison of the account services offered by Wealthfront and Vanguard Personal Advisor:

Overall, Wealthfront offers a more comprehensive range of account services that can help you manage your finances more effectively.

If you're looking to start investing with a robo-advisor, the minimum deposit required can be a significant factor. Wealthfront has a much lower minimum deposit of just $500.

Vanguard's robo-advisor, on the other hand, requires a significant upfront investment of $50,000.

Wealthfront's lower minimum deposit makes it a more attractive option for those who want to test out robo-advisory services without breaking the bank.

Here's a comparison of the minimum deposits required by Wealthfront and Vanguard:

When managing your investments, it's essential to know what types of assets are available to you. Wealthfront and Vanguard Personal Advisor have different offerings.

Wealthfront allows you to hold individual stocks if your portfolio is worth more than $100,000, enabling direct stock indexing to replace U.S. stock ETFs.

Vanguard Personal Advisor, on the other hand, offers mutual funds, but Wealthfront does not.

Both services provide fixed income options through ETFs, which can be a great way to diversify your portfolio.

If you're interested in real estate investing, you can hold REITs with Wealthfront, but Vanguard Personal Advisor does not offer this option.

Wealthfront and Vanguard Personal Advisor both offer socially responsible or ESG options, which can be a good fit for investors who prioritize sustainability.

Here's a summary of the available assets for each service:

Wealthfront also allows you to invest in crypto, which can be a high-risk but potentially high-reward option.

Vanguard Personal Advisor, however, does not offer crypto investing.

Wealthfront offers a range of customization options to fit your financial goals.

You can open a 529 college savings account, which is a rare feature among robo-advisories. This account type comes with slightly higher fees due to an administrative fee.

Wealthfront's cash account offers high-interest rates, unlimited transfers, and FDIC insurance up to $8 million.

A portfolio line of credit is available once you reach $25,000 in your individual, trust, or joint investment account. You can borrow up to 30% of your account at relatively low interest rates, with no credit check or credit score impact.

Wealthfront's PassivePlus investing strategy uses rules-based investment strategies to maximize client investments through tax-loss harvesting. At higher asset levels ($100,000 and up), the company offers stock-level tax-loss harvesting and risk parity.

Here are some key features of Wealthfront's customization options:

Vanguard Personal Advisor, on the other hand, offers dedicated advisors for large accounts, cross-company application, and whole-picture advice.

Wealthfront has received funding from a number of notable investors, including Benchmark Capital, DAG Ventures, Index Ventures, Social Capital, Marc Andreessen, and Jeff Jordan.

These investors have provided significant support to the company, with a funding round in April 2014 led by Index Ventures, Ribbit Capital, and Benchmark Capital bringing in $35 million.

The total funding brought to the firm by this round was $65.5 million, a substantial amount that reflects the confidence investors have in Wealthfront's vision and capabilities.

Tax-advantaged investing is a crucial aspect of managing your finances, and there are several ways to do it efficiently. One popular method is tax-loss harvesting, which involves selling securities at a loss to offset capital gains tax liability.

Tax-loss harvesting is available for all taxable accounts, and Wealthfront is one of the robo-advisors that uses this method. They also offer stock-level tax-loss harvesting for accounts over $100,000.

Wealthfront uses the MinTax cost basis method, which identifies specific units of securities to sell in any sale transaction. This method minimizes the tax impact of transactions in many cases, but not always.

Here's a list of account types that support tax-loss harvesting:

Wealthfront's portfolio automation features include automatic tax-loss harvesting, which can potentially lower your year-end tax bill. They also reinvest your dividends with each payout, helping your portfolio grow through the power of compounding.

Wealthfront's automation tools are designed to make investing easier and more efficient. They include automatic rebalancing, which ensures your portfolio stays on track by selling and buying assets as needed.

Automatic tax-loss harvesting is another key feature, which helps lower your year-end tax bill by offsetting gains with losing positions. This can save you a significant amount of money over time.

With Wealthfront, you can also reinvest your dividends automatically, which helps your portfolio grow through the power of compounding. This means you can earn interest on your interest, leading to faster growth over time.

Wealthfront's automation tools are designed to work seamlessly behind the scenes, so you can focus on other things. They're monitored daily, and rebalanced when assets drift from your target allocation by large amounts.

Here are some key features of Wealthfront's automation tools:

These automation tools are designed to make investing easier and more efficient, so you can focus on other things.

Wealthfront offers a range of investment options to suit different needs and goals. You can invest in up to 17 global asset classes, including U.S. stocks and bonds, international stocks and bonds, real estate, and commodities.

Wealthfront's portfolios are built using a combination of low-cost index funds and exchange-traded funds (ETFs) from major investment brokers. This includes iShares, Schwab, and Vanguard, which are known for their low fees and high-quality investments.

Wealthfront's investment options include a high-yield cash account with a 4% APY, commission-free individual stock investing, and a 529 college savings plan. You can also choose from various portfolio investment styles, such as Classic, Socially Responsible, and Automated Bond.

Here are some of the key investment options available through Wealthfront:

Wealthfront's investment options are designed to be flexible and adaptable to your changing needs. With automatic rebalancing and tax loss harvesting, you can rest assured that your investments are working hard for you.

Wealthfront and Vanguard are two popular investment options, but they have some key differences. Wealthfront is primarily a robo-advisor investment platform, whereas Vanguard is a large brokerage firm with a long history of creating low-cost index funds.

One major difference is that Vanguard provides access to human advisors, which can be beneficial for those who want personalized guidance. Wealthfront, on the other hand, focuses on technology and does not offer human advisors.

Here's a comparison of some key features:

Both Wealthfront and Vanguard offer tax loss harvesting, which can help minimize tax liabilities. Wealthfront's automatic rebalancing feature is monitored daily, while Vanguard's is monitored quarterly.

Wealthfront builds its robo-advisor portfolios using a combination of low-cost index funds and exchange-traded funds (ETFs) from major investment brokers, including iShares, Schwab, and Vanguard. This approach is based on modern portfolio theory, which aims to generate the highest return for the lowest possible risk level.

You'll enter your goals and risk tolerance when you enroll, and Wealthfront will build you a portfolio of up to 17 different asset classes, including U.S. stocks and bonds, international stocks and bonds, real estate, and commodities. The greater your risk tolerance, the more your portfolio will be in stock funds vs. bonds.

Wealthfront offers five different portfolio investment styles to choose from:

Wealthfront also offers a 529 college savings plan, which is rare among robo-advisories, and a high-interest cash account with unlimited transfers and FDIC insurance up to $8 million.