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Robo Advisor Ellevest, Are These Women Only High Complex Portfolios Worth It?

Robo-advisor Ellevest Portfolios

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The Roboadvisor portfolios by Ellevest are covered in this article. In the article, you can find the description of the Ellevest portfolios. You can also find the performance of the portfolios and you can find out how you can implement them yourself.

Robo Advisor Ellevest are these women-only high complex portfolios worth it?

Ellevest was founded in 2014. It is a roboadvisor explicitly targeting women.

Ellevest competes with many other robo advisor firms such as Betterment, Wealthfront, and Wealthsimple.

Ellevest exploits the sentiment that many women feel intimated by investing. Ellevest tries to use empowering words and pictures to draw women to their platform.

It is still investing. In investing, and in particular, in index investing, the rules are the same. It doesn’t matter if you are a woman or a man. The asset classes don’t care if you are a woman or a man.

To be sure, framing investing in a particular light will help.

Ellevest uses a goal-based approach to construct their portfolios. It is pretty nifty and makes you feel like they pay extra attention to your attention.

Description of robo-advisor Ellevest portfolios

Morningstar builds the Ellevest portfolios. We have seen from Morningstar’s portfolios that they love to have many asset classes.

Ellevest also uses many portfolio asset classes for their portfolios. Ellevest also has tons of portfolios. They claim to have over a hundred, which I don’t doubt.

For this reason, we decided only to benchmark a selected portion of Ellevest’s portfolios.

Here’s how we selected the portfolios.

We chose the goal of “wealth-building.” Within that goal, we chose the time frames:

  • Five years
  • Ten years
  • Fifteen years
  • Twenty years

Then, within each timeframe, you can select three risk levels

  • Conservative
  • Standard
  • Aggressive

The timeframe tweaks the risk level very slightly.

We thus have 12 portfolios to benchmark (4 timeframes times three risk levels)

We give the portfolios a number ranging from 1 – 12, denoting their risk level. 12 is the portfolio with the most risk.

So portfolio 1 is for a timeframe of 5 years with a conservative level of risk. Portfolios 12 is for a timeframe of 20 years with an aggressive risk level.

Are you confused yet?

It gets even more confusing – hang in there.

Ellevest also has impact portfolios. These are socially responsible investing portfolios (ESG portfolios). They use very particular funds that do not have a long track record. If you want a socially responsible portfolio, we recommend checking our socially responsible investment portfolios that portfolioeinstein.com track.

You don’t need hundreds of portfolios to help your customers.

We are not (yet) tracking Ellevest’s impact portfolios.

Decision paralysis

The many choices of Ellevest’s portfolios create a decision paralysis. Barry Schwartz describes the phenomenon, his excellent book The Paradox of Choice, Why More Is Less, Revised Edition. Decision paralysis states that the more choices you have, the less you buy.

I think Ellevest should discard a ton of their portfolios. They should remove 2/3 of their portfolios. They should start by dropping their subdivision portfolio of conservative, standard, and aggressive classification. They can instead make this division based on the timeframe. For the average investor, it is simply overwhelming and frankly totally irrelevant whether you are 2.4% in bonds or 4% in bonds. It is not going to move mountains.

You don’t need hundreds of portfolios to help your customers.

The many choices may make Ellevest look extremely savvy and competent, but I think they do a disservice to their customers.

Asset class choices

Morningstar, which has built the Ellevest portfolios, uses a lot of asset classes.

  • Ellevest use muni bonds when you are close to your target (lower risk)
  • They use REITs and junk bonds early on to capture as much return as possible
  • They use some very rarely seen asset classes like the high yield municipal bonds (HYD). We use corporate bonds as a proxy for this. They have comparable returns and risk levels.

I was already impressed by the Morningstar portfolios, and Ellevest gives off the same impression.

They come off as being highly asset allocation clever. They use the right tools for the right job.

For all the complexity that the Ellevest portfolios display, some of the portfolios are identical. For example, portfolio 5 and 7 are the same. In Ellevest, these correspond to 10 years till goal on a standard risk level and 15 years till goal on a conservative risk level. The same goes for portfolio 6 and 8. And the same with 8 and 10 and 11 and 9.

Alright, let take a look at the performance.

Performance of robo-advisor Ellevest portfolios

NameAsset class countYear to dateReturn in 201910 year returnCAGR since 1989 (%)Risk levelExpense ratio
Ellevest Wealthbuilding Portfolio 113-9.02%16.376.83%7.5220.07%
Ellevest Wealthbuilding Portfolio 214-9.79%17.447.20%7.7620.07%
Ellevest Wealthbuilding Portfolio 315-10.61%18.47.54%8.0720.07%
Ellevest Wealthbuilding Portfolio 414-12.84%21.438.54%8.6730.06%
Ellevest Wealthbuilding Portfolio 513-13.60%22.48.85%8.8430.06%
Ellevest Wealthbuilding Portfolio 613-14.19%23.579.28%9.0330.06%
Ellevest Wealthbuilding Portfolio 713-13.60%22.48.85%8.8430.06%
Ellevest Wealthbuilding Portfolio 813-14.19%23.579.28%9.0330.06%
Ellevest Wealthbuilding Portfolio 912-14.89%24.599.59%9.1930.06%
Ellevest Wealthbuilding Portfolio 1013-14.19%23.579.28%9.0330.06%
Ellevest Wealthbuilding Portfolio 1112-14.89%24.599.59%9.1930.06%
Ellevest Wealthbuilding Portfolio 1212-15.59%25.69.87%9.2830.06%

The performance is not impressive for the amount of complexity put into the portfolios.

Building the portfolio(s)

Below you can see the asset allocations for the portfolio(s). You can also see if the portfolio(s) has a socially responsible investing (ESG) variant portfolio. You can read more about socially responsible investing (ESG) investment portfolios in this post.
To build the portfolio(s) yourself, go to our best in class ETF page to see which ETF you should choose for a particular asset class. There you can also see which socially responsible investing ESG ETFs you should select.

Asset Allocation for robo-advisor Ellevest portfolios

NameTotal US MarketInternational DevelopedLarge Cap ValueMid Cap ValueMid Cap BlendSmall Cap ValueSmall Cap BlendEmerging MarketsREITsCashIntermediate Corp BondsShort Term MunisIntermediate Terms MunisEmerging Market BondsInt. REITs
Ellevest Wealthbuilding Portfolio 121.00%13.50%4.50%1.00%2.50%1.00%1.00%6.50%1.00%3.00%18.00%25.00%2.00%
Ellevest Wealthbuilding Portfolio 222.50%15.00%5.00%1.00%2.50%1.00%1.00%7.00%1.00%1.00%2.50%15.00%23.50%2.00%
Ellevest Wealthbuilding Portfolio 324.00%14.50%6.00%1.50%2.50%1.00%1.00%8.50%1.00%1.00%2.00%12.50%22.00%1.50%1.00%
Ellevest Wealthbuilding Portfolio 429.00%19.00%7.00%1.50%3.00%1.50%2.50%10.50%1.00%1.00%1.50%5.00%16.50%1.00%
Ellevest Wealthbuilding Portfolio 531.00%20.50%7.50%1.50%3.50%1.50%2.50%11.00%1.00%1.00%3.00%15.00%1.00%
Ellevest Wealthbuilding Portfolio 634.50%21.50%8.00%1.50%3.50%1.50%2.50%11.00%1.00%1.00%1.00%12.00%1.00%
Ellevest Wealthbuilding Portfolio 731.00%20.50%7.50%1.50%3.50%1.50%2.50%11.00%1.00%1.00%3.00%15.00%1.00%
Ellevest Wealthbuilding Portfolio 834.50%21.50%8.00%1.50%3.50%1.50%2.50%11.00%1.00%1.00%1.00%12.00%1.00%
Ellevest Wealthbuilding Portfolio 937.00%23.00%8.00%1.50%3.50%2.00%2.50%11.50%1.00%1.00%8.00%1.00%
Ellevest Wealthbuilding Portfolio 1034.50%21.50%8.00%1.50%3.50%1.50%2.50%11.00%1.00%1.00%1.00%12.00%1.00%
Ellevest Wealthbuilding Portfolio 1137.00%23.00%8.00%1.50%3.50%2.00%2.50%11.50%1.00%1.00%8.00%1.00%
Ellevest Wealthbuilding Portfolio 1239.00%25.00%8.00%1.50%4.00%2.00%3.00%11.50%1.00%1.00%3.00%1.00%

How we select the right ETFs

There are a lot of ETFs out there. Most of them can be discarded because:

  • They are too expensive
  • They hold too few assets and are therefore too illiquid
  • They do not meet the criteria for representing the asset class they are supposed to mirror.

We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?

If you are a European investor you need to buy European ETFs. We list 47 best ETFs in our article What Are The Best ETFs For European Investors? (Here Is 47).

As of 2020 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social and corporate governance issues.

You can find the socially responsible investing ESG ETFs in the same article.

Resources for the robo-advisor Ellevest portfolios

Check out the Ellevest YouTube channel.

Conclusion

Suggestions for your next steps

Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone

If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful. Rebalancing your portfolio lowers your risk and may even provide higher returns in the long run.

You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool

Conclusion

Ellevest is a robo-advisor offering for women but anyone can build the Ellevest invesment portfolio with just a few ETFs.

Their portfolios are complex, going into confusing territory. Despite their complexity, they don’t yield higher returns than a more simple portfolio.

Are you considering investing with Ellevest?

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