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Wealthfront is looking to lure wealthier investors to its automated investing service by adding an investment strategy that the company previous attacked Charles Schwab for adding to its robo advisor.
On Thursday, the Redwood City, Calif.-based company announced the new feature, Advanced Indexing, on its official blog, explaining that it works to increase an investor's returns by weighting the individual securities in a portfolio more intelligently.
Wealthfront pairs Advanced Indexing with its Direct Indexing product to minimize the impact of taxes on excess returns, and says that while 95 percent of smart beta ETFs only use one factor, Wealthfront diversifies across factors to improve returns and maximize chances of outperforming a cap-weighted index without changing a portfolio's risk. It also isn't charging any additional fees for Advance Indexing.
According to the company's research, which it details in a whitepaper, Wealthfront expects the U.S. stock allocation of a client's portfolio to outperform the cap-weighted index by up to 1 percent annually because of Advanced Indexing.
The company said Advanced Indexing...