Week 3 Betterment v Wealthfront Results

This week in stocks had the worst week since February. The major averages declined more than 1 percent, the worst since Feb. 5, for S&P 500 and Nasdaq composite and the worst since Feb. 12 for Dow Jones Industrial average.

Looking at Betterment and Wealthfront, their decline wasn’t as big of a loss as the major averages.

Here are the numbers:

Dow Jones: -1.25%

S&P: -1.23%

NASDAQ: -1.23%

Betterment: -0.79%

Wealthfront: -0.45%

Here you’ll see that Wealthfront’s portfolio is slightly better than Betterment. Here are some screenshots of what each of these robo-advisory platforms invested in:


Betterment allocation


Wealthfront allocation

You can see that these two platforms invests completely different from each other. This is one of the reasons why I’m testing out to see which platform performs better in the long run.

Betterment’s website explains why they chose their ETFs:

Betterment exclusively uses open-ended index tracking ETFs rather than mutual or closed-end funds due to their low manager risk, low embedded costs and natural tax efficiencies. These structural advantages along with the maturation and growth of the global ETF market over the last two decades has led to liquid investments covering different asset classes, markets, styles, and geographies. As a result, we can source investment vehicles from a market of portfolio components which are versatile, extremely liquid, and easily substitutable. However, not all ETFs are exactly alike and the difference between an optimal and a suboptimal selection can have non-trivial effects on long-term performance of a portfolio.

You can find more information here: Why did you pick these ETFs?

I’ll explain further about the different ETFs in a blog post at a later date.

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