Modern Portfolio Theory Archives | Wealthfront Blog Personal Finance & Investing Insights Wed, 12 Jan 2022 01:12:46 +0000 en-US hourly 1 https://www.wealthfront.com/blog/wp-content/uploads/2019/09/cropped-wave-logo-transparent-hi-res-500x500.png Modern Portfolio Theory Archives | Wealthfront Blog 32 32 We’re Updating the Asset Allocation for Wealthfront’s Recommended Portfolios https://www.wealthfront.com/blog/updating-asset-allocation-for-recommended-portfolios/ Wed, 07 Jul 2021 19:30:45 +0000 https://www.wealthfront.com/blog/?p=14129 As an investment adviser, we have a fiduciary duty to our clients which means we’re legally required to act in your best interests. This commitment to you informs every product we build, every service we offer, and every piece of advice our software provides.  As part of this, we periodically review and update the asset […]

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]]> What Are Robo-Advisors, and How Do They Differ? https://www.wealthfront.com/blog/what-are-robo-advisors-and-how-do-they-differ/ Fri, 06 Nov 2020 22:49:26 +0000 https://www.wealthfront.com/blog/?p=13659 Note: Wealthfront’s Stock-level Tax-Loss Harvesting is now called US Direct Indexing. If you’re interested in investing, odds are you’ve heard the word “robo-advisor” used before. While it’s fun to imagine a robot managing your investment portfolio and beeping cheerfully as it works, robo-advisors are actually automated investing services managed by software instead of human advisors.  […]

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]]> Following the Rules https://www.wealthfront.com/blog/following-rules/ Thu, 18 Jan 2018 19:14:24 +0000 http://www.wealthfront.com/blog/?p=8311 Note: Wealthfront’s Stock-level Tax-Loss Harvesting is now called US Direct Indexing. There’s not much debate that computers are better at routine tasks than people. But most people don’t realize that good investing is incredibly routine. And by routine I mean rules-based. Time and time again academic research has shown that rules-based approaches outperform judgment-based approaches […]

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]]> Risk Is Not as Simple as It Appears https://www.wealthfront.com/blog/risk-return/ Wed, 15 Mar 2017 16:53:22 +0000 http://www.wealthfront.com/blog/?p=7450 Most investors know that for every level of risk there exists a portfolio that maximizes their returns. However, many overestimate their ability to assess their own risk tolerance.

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]]> Why Diversify a Concentrated Portfolio? https://www.wealthfront.com/blog/diversify-concentrated-portfolio/ Thu, 05 Jan 2017 16:57:55 +0000 http://www.wealthfront.com/blog/?p=7162 If you work for a successful company, chances are a significant share of your wealth is tied up in your employer’s equity. This likely makes you wonder if you are better served diversifying out of your concentrated position. In this post, we use Modern Portfolio Theory to show why your employer’s stock has to have […]

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]]> Choosing Asset Classes Is Another Form of Market Timing https://www.wealthfront.com/blog/choosing-asset-classes-another-form-market-timing/ Tue, 06 Jan 2015 14:23:36 +0000 http://www.wealthfront.com/blog/?p=4916 Any reader of our blog will know that we are not fans of market timing. As our CIO Burt Malkiel is fond of pointing out, research consistently proves it’s almost impossible to outperform the market by attempting to time it. Burt has won great acclaim since he first wrote about this phenomenon 40 years ago […]

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]]> Do You Need A Private Banker? https://www.wealthfront.com/blog/pros-cons-private-banker/ Thu, 23 Aug 2012 14:42:14 +0000 http://www.wealthfront.com/blog/?p=3260 A private banker is someone who focuses on the needs of wealthier-than-average clients. Sometimes, he or she works for a private bank within a large institution, like J.P. Morgan Private Banking; other times, his or her institution is a private bank, like U.S. Trust. Private banks used to exclusively serve people with millions of dollars […]

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]]> Why Critics Of Modern Portfolio Theory Are Wrong https://www.wealthfront.com/blog/modern-portfolio-theory-criticism/ Tue, 14 Aug 2012 03:29:56 +0000 http://www.wealthfront.com/blog/?p=3196 On Saturday, TechCrunch published Is Modern Portfolio Theory Dead? Come On. by Wealthfront advisor Paul Pfleiderer. Professor Pfleiderer, the C.O.G. Miller Distinguished Professor of Finance at the Stanford Graduate School of Business and co-founder of Quantal International, takes on critics of Modern Portfolio Theory in the article. Modern Portfolio Theory (MPT), which won a Nobel […]

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]]> How To Build An Investment Portfolio With ETFs https://www.wealthfront.com/blog/diversified-investment-portfolio-etfs/ Thu, 05 Jan 2012 19:36:32 +0000 /blog/?p=1696 Many investors are shifting their allegiance from mutual funds to ETFs. ETFs offer more transparency and, almost always, lower fees than mutual funds. The question for the thinking investor is how to combine ETFs to build a portfolio that makes sense – meaning, one that has the best chance of achieving the returns you want, […]

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