At WealthSeed we offer access to an investment program managed by IQvestment, an SEC Registered Investment Advisor. IQvestment provides asset allocation portfolios using Exchange Traded Funds (ETFs) based on a client’s stated risk tolerance.
What are ETFs?
ETFs are a collection of tens, hundreds, or sometimes thousands of company stocks or bonds combined into in a single investment. ETFs are called exchange traded because these ETF funds trade on major stock exchanges such as the New York Stock Exchange and NASDAQ. ETFs are assigned a “ticker” symbol and they can increase or decrease in value just like any other stock or bond.
- Diversification – By holding lots of stocks or bonds within an ETF, investors aim to reduce their portfolio risk and volatility, by having each holding be a smaller portion of the overall portfolio. For example, say you wanted to invest in the 500 largest stocks traded on US exchanges, buying the SPDR S&P 500 ETF (SPY)* would accomplish this goal by providing an investment in these 500 companies though one instrument which trades daily under the symbol SPY.
- Lower Costs** – Operating expenses are incurred by all managed funds regardless of the structure. Those costs include things like portfolio management fees, custody costs, administrative expenses, marketing expenses, and distribution. These costs are paid for by the investment fund and will impact the overall return realized by the fund. ETF operation costs can be streamlined compared to open-end mutual funds.
- Tax Benefits – ETFs are more tax efficient compared to mutual funds. Capital gains tax on an ETF is incurred only upon the sale of the ETF by the investor, whereas mutual funds pass on capital gains taxes to investors through the life of the investment.
The IQvestment Approach
IQvestment defines your stated tolerance for risk by utilizing an online investment questionnaire that the investor completes. Based on your personal risk tolerance, IQvestment will invest your money in a portfolio of low-cost stock, bond and other ETFs.
Quarterly, the IQvestment investment committee reviews portfolios, while its investment algorithm rebalances your portfolio, making sure it stays aligned with your stated tolerance for risk.
To see what your investing risk tolerance is click here.
* SPDR S&P 500 ETF (SPY) is an ETF owned and distributed by State Street Global Advisors and has no affiliation with WealthSeed or IQvestment.
** ETF costs will vary by fund, not all ETFs are less expensive then mutual funds. Investors should refer to the specific prospectus for each funds costs.