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- Overview and Algorithm Introduction
- Nobel-Prize Winning, Long-Term Strategy
- Index Investing
- Dynamic Fund Selection
- Investing Globally
- Tax-Loss Harvesting
- Smart Rebalancing
- The “Efficient Frontier”
Balancing Risk and Return
FutureAdvisor balances portfolios on the “efficient frontier,” investing in mix of assets that helps you seek solid returns for the least amount of risk. That is, for each level of risk that FutureAdvisor investors choose -- conservative, moderate or aggressive -- we’re able to allocate their assets to help maximize their chances of growth. The line that connects those points of maximum growth at each risk level is the efficient frontier.
The way we allocate assets is influenced by the Fama-French Five-Factor Model. Fama and French showed that investors can reap persistently higher returns without any additional long-term risk by exposing themselves to small-capitalization stocks (i.e. smaller companies) instead of huge Fortune 500 companies, and to value stocks (low priced) instead of growth stocks.