Sounds too good. Low fees, good reward and low risk for long term investment. Any finance experts have thoughts on this? https://blog.wealthfront.com/risk-parity/
Disclaimer: Have ~150K in Wealthfront. Lots of problems with risk parity theory. The biggest w/ this implementation is how they’re rolling it out and jacking up the fees for that section to 0.5% for a month old hedge fund. The issue is that trying to match risk may be the wrong way to build a portfolio, and risk parity can end up leveraging up on temporarily non volatile assets right before it blows up. https://seekingalpha.com/article/4144431-problem-risk-parity http://www.schroders.com/en/au/advisers/insights/white-papers/risk-parity---no-free-lunch1/ You also pay additional cost to maintain all the derivatives and it seems like such a huge step from the original low cost index fund passive strategy, without much convincing in their paper. Based on their extremely limited sample size of performance the returns and even volatility seem worse than pure SP500. It may be a really good way to hedge in the long run. As a dyed in the wool low cost indexer this makes me cringe and want to not put anything more into Wealthfront, but I’ll give it some time to settle and probably opt out until the fund has more history. I’m risk averse and really don’t want to be the guinea pigs in this new hedge fund.
You also have to explicitly opt out, which is shady. There are also some hidden fees on the back end.
Self trade Robinhood 0 fees or minimal fees with other brokerages
You are paying something that is free elsewhere; I don't get it.
Are you talking about Wealthfront ETF management or this Risk Parity (quasi) hedge fund that they launched?
Both