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E-Trade Core Portfolios is a robo-advisor platform that integrates with E-Trade’s main broker product and gives hands-off investors a great place to grow their money. Answer a few quick questions about your timeline and how comfortable you are with fluctuations in your investments, and E-Trade Core Portfolios suggests one of five simple portfolios to help you achieve your goals — and then manages the portfolio for you.
E-Trade Core Portfolio builds investment portfolios from low-cost ETFs. Active investors might not love the fact that E-Trade doesn’t reveal what specific ETFs they’re buying as underlying investments. If you’re a hands-off investor, E-Trade Core Portfolios handles the heavy lifting for you, rebalancing your portfolio on a regular basis and remixing your asset allocation as markets change. One caveat: E-Trade Core Portfolios doesn’t offer tax-loss harvesting, in which investments are sold at a loss to lower the investor’s taxes.
Who should consider E-Trade Core Portfolios?
E-Trade Core Portfolios is a slam-dunk option for investors who are already E-Trade online brokerage customers, since they’re familiar with the company and they already have an account. Just open an E-Trade Core Portfolios account and transfer some or all of your other balances with the brokerage.
Compared to similar robo-advisors, E-Trade Core Portfolios isn’t the cheapest option. However, they do offer the resources and support of a very large company, plus the ability to have a hands-on brokerage account and a robo-advisor account under a single login. This is something not offered by free-standing robo-advisors, like Wealthfront and Betterment.
This is a great option for someone who wants hands-off investing together with the option to do no-fee active trading, too. If you’re looking for a robo-advisor only, or you’re not already an E-Trade customer, other choices offer portfolio design and management for slightly lower fees.
E-Trade Core Portfolios fees and features
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
Pay no advisory fee for one year.
|Tax loss harvesting|
|Tax loss harvesting detail||A tax sensitive investment strategy that uses municipal bond ETFs, which may help to reduce taxes on account interest and dividends.|
|Offers fractional shares|
|Ease of use|
|Mobile app||iOS, Android|
|Customer support||Phone, 24/7 live support, Chat, Email, 30 branch locations|
How does E-Trade Core Portfolios invest your money?
Before opening an account, E-Trade Core Portfolios allows potential clients to run through their simple eight-question form that helps the platform determine your goals and your level of risk tolerance.
After finishing the questionnaire, E-Trade Core Portfolios recommends one of five different diversified portfolios of low-cost ETFs. (It used to offer a hybrid portfolio of both ETFs and mutual funds, but that option is no longer available.) You can choose the recommended portfolio, or you can choose an alternative investment mix from the five portfolio options:
- Conservative: 20% stocks, 80% bonds
- Conservative Growth: 40% stocks, 60% bonds
- Moderate Growth: 60% stocks, 40% bonds
- Growth: 80% stocks, 20% bonds
- Aggressive Growth: 99% stocks, 1% bonds
You can further customize your portfolio by adding a socially responsible ETF, focusing on companies known for their environmental, social, and governance practices, or a smart beta ETF, which favors equities with certain characteristics that may help boost your overall returns.
E-Trade Core Portfolios bases its investing approach on Modern Portfolio Theory (MPT), which holds that portfolios be constructed from a combination of asset classes based on the expected returns and volatility that they’ve displayed previously. Though this approach leans heavily on historical data, which may not be representative of what an investment will do in the future, the goal is to limit risk and increase returns. E-Trade’s team also considers an investment’s risk, expenses, manager tenure, performance and style consistency and asset size and growth.
Notably, E-Trade Core Portfolios doesn’t disclose exactly which ETFs it uses for your portfolio, although it does state that there are no proprietary E-Trade ETFs in the mix, meaning that E-Trade isn’t including E-Trade-branded funds.
E-Trade Core Portfolios rebalance semiannually and when material deposits or withdrawals are made. Although the robo-advisor offers a “tax-sensitive” investing approach, there is no tax-loss harvesting.
Integration with E-Trade brokerage accounts
Customers who already have an account with E-Trade will find it easy to create a Core Portfolios account, as they can use their account information to pre-populate (and speed up) the application process. They can then convert a brokerage (or other) account to Core Portfolios, or transfer money from another account to fund the robo option.
Being an E-Trade customer also brings with it the option of visiting one of the brokerage’s national brick-and-mortar locations, which will appeal to people who like face-to-face interaction.
Strengths of E-Trade Core Portfolios
- Ease of use: Just answer a few questions, and E-Trade Core Portfolios will suggest a portfolio mix for you — it’s a very simple product to use. You can choose one of five portfolio options if you’re feeling like taking on more or less risk. The choices are simple and minimal, which will appeal to someone who might be overwhelmed by all their investing options.
- Socially conscious investing option: Although this robo-advisor doesn’t offer a full socially responsible investment portfolio, clients who want to put their money where their values are do have the ability to add a socially responsible ETF to their investment mix. This fund focuses on companies known for being good corporate citizens. Compare this to Wealthfront, which doesn’t offer any socially conscious strategies until investors have $100,000 in their account.
- Active portfolio strategy available: For investors interested in a little more activity with their portfolio, E-Trade Core Portfolios offers the option of adding a smart beta ETF to your mix. This strategy combines aspects of active and index investing, favoring equities with characteristics that could boost your future returns.
- Branch access: If you want to talk with a customer service representative face-to-face, E-Trade has nationwide branches where you can sit down with a consultant.
- E-Trade integration: Current E-Trade customers can easily transfer or convert their accounts to E-Trade Core Portfolios. You also have access to E-Trade’s other accounts and services — E-Trade offers a rich array of guides, articles, videos and other media on investing topics, from stocks to retirement planning to how to calculate your cost basis.
Drawbacks of E-Trade Core Portfolios
- Minimum balance requirement: You’ll need $500 to get started with E-Trade, which isn’t a fortune, but it’s bigger than the zero minimums at Betterment and SoFi.
- Higher management fees: E-Trade Core Portfolios charges a 0.30% annual management fee. While this is still a competitive rate, it’s higher than Betterment and Wealthfront, which both charge 0.25% — and they’re all higher than SoFi, which doesn’t charge any portfolio management fees at all.
- No tax-loss harvesting: E-Trade Core Portfolios claims to use a tax-sensitive investment strategy that uses municipal bond ETFs to help reduce taxes, but it doesn’t offer tax-loss harvesting, which is a standard service at other robo-advisors. Tax-loss harvesting involves selling losing investments in taxable accounts to reduce capital gains taxes paid on investment gains.
- No financial planning: There are no goal planning tools or any way to divide your savings based on objectives (such as retirement or college savings), nor is there any advice on your savings rate, your balance or whether you’re on the right track. Wealthfront’s planning tools offer automated advice on retirement, college savings, buying a house and whether or not you can take time off for travel.
- Less information than other robos. Although E-Trade tells clients it invests in a basket of low-cost ETFs, it doesn’t say which ETFs. This seems unnecessarily vague, especially when other robo-advisors, such as Betterment and Wealthsimple, list the underlying investments in their portfolios.
Is E-Trade Core Portfolios safe?
There’s no such thing as risk-free investing, but E-Trade has been operating as a discount broker for many years and is well-respected. It’s a FINRA member, which means that it’s met licensure and regulatory requirements. It’s also a member of SIPC, insuring customer accounts for up to $500,000. That said, your portfolio’s performance is not guaranteed, so make sure you carefully research investment options to make sure you’re comfortable investing your money with E-Trade’s robo-advisor service.
Is E-Trade Core Portfolios right for you?
While Core Portfolios gives you access to E-Trade’s extensive infrastructure, including local branches, the minimum balance requirement and management fees are slightly higher than competitors. There are no goal planning tools, and the robo doesn’t offer tax-loss harvesting.
That said, E-Trade is also a well-known brokerage name with extensive educational content and a simple investing strategy that may appeal to existing E-Trade customers and others looking for big-name reputation, customer service and security.