E*TRADE Core Portfolios Features

How Does E*TRADE Core Portfolios Work?

E*TRADE Core Portfolios starts with a three-step process:

• Step 1: Complete your investor profile. This is a series of questions designed to establish your goals, time horizon and risk tolerance. Your portfolio is created based on this information.
• Step 2: Review your investment proposal. You’ll receive a tailor-made proposal. You can choose between a portfolio of all exchange-traded funds (ETFs) or a mix of ETFs and mutual funds.
• Step 3: Implement your portfolio. If you accept the custom-designed portfolio offered and meet the minimum investment requirement, you can activate the portfolio.

Unlike traditional managed portfolios, Core Portfolios accounts do not have an individual portfolio manager. Instead, portfolio management is handled by E*TRADE Capital Management through its Investment Policy Committee and with the support of Investment Strategist. They will select, remove and add portfolio holdings and determine rebalancing methodology.

If you want to receive personalized support from a human, you can select one of E*TRADE’s other investment products such as Blend Portfolios or Dedicated Portfolios for a higher fee.

What Does It Offer

E*TRADE is a leading online broker and is one of our favorite investing platforms at Investor Junkie. But its Core Portfolios robo advisor also has excellent features and holds its own in the competitive robo landscape.

Two Types of Investment Portfolios

You can choose between a portfolio that’s composed entirely of ETFs or one that includes a combination of ETFs and mutual funds.

The all-ETF portfolio is made up of indexed funds with very low operating costs designed specifically to match the performance of the general markets. The portfolio offers an opportunity to achieve broad diversification at a very low cost.

The hybrid portfolio consists of both ETFs and mutual funds. It uses ETFs to provide low-cost diversification but adds mutual funds if it’s determined that actively managed funds may add value to the portfolio. This provides the investor with an opportunity to pursue investment returns that have the potential to outperform the general markets. You can also opt for some ESG investing options, although that’s not what E*TRADE specializes in.

In both cases, E*TRADE Core Portfolios use funds that provide exposure to various market segments. Your portfolio is typically comprised of six to eight funds. The mix can include large- and small-cap stocks, emerging markets, international markets, intermediate- and short-term bond funds, Treasury Inflation Protected Securities (TIPS) and high-yield bonds.

Portfolios are comprised of funds from iShares, Vanguard and other fund families, while mutual funds are provided by a larger number of fund families. Core Portfolios avoids the use of E*TRADE’s proprietary funds in constructing these portfolios.

Very little cash is held in either type of portfolio. In fact, the cash position is limited to a 1% allocation. Any cash beyond that is moved into funds.

Automatic Rebalancing

Like other leading robo advisors, Core Portfolios rebalances your portfolio based on E*TRADE Capital Management’s portfolio allocation drift parameters. Your portfolio “self-adjusts” by comparing your portfolio allocations to the target allocation drift parameters each trading day after the markets close.

When necessary, trade orders are submitted the following trading day to bring the portfolio into alignment with target allocations.

Account Protection

Accounts are protected by SIPC, which provides coverage for up to $500,000 per account, including $250,000 in cash. This coverage provides protection against broker failure and not against market value fluctuations.

E*TRADE provides additional brokerage protection. It has additional coverage from London insurers with an aggregate limit of $600 million to pay amounts in addition to those returned in a SIPC liquidation, provided that (1) the combined return from the trustee distributions, SIPC and London to any customer does not exceed $150 million, and (2) as a sub-limit, return of cash to any customer by London does not exceed $900,000. Like SIPC, this coverage does not protect against loss of the market value of securities.

Low Minimum Deposit

There’s a $500 minimum deposit requirement to open an E*TRADE Core Portfolio account. This is in the same ballpark as competitors like Betterment and Wealthfront, which charge $0 and $500 respectively.

If your account balance drops below this level, your account will remain open. However, E*TRADE will eventually request that you add additional funds to bring the account up to $500. This is felt to be the minimum balance necessary in order to maintain the portfolio.

E*TRADE Core Portfolios Mobile App

E*TRADE Core Portfolios is available for mobile apps for both iPhone and Android, as well as tablets. The apps provide:

• Research for stocks, ETFs and mutual funds, including E*TRADE’s All Star Fund List and screener
• Real-time streaming quotes, including Level II, and charts
• Enhanced quote details for stocks, ETFs mutual funds, options and indexes
• Conditional orders, including one-triggers-other (OTO), contingent and stop-loss
• Mobile check deposit by snapping a picture
• Customizable dashboard that can include your top portfolio performers, open orders banner, and portfolio and watchlist-related news stories

How Much Does E*TRADE Core Portfolios Cost?

E*TRADE Core Portfolios charges an annual “advisory” fee of 0.30%. The fee is charged to your portfolio at the beginning of each quarter. You also pay fund-related expense fees, as will be the case with all robo advisor services. Those fees will be slightly higher on the hybrid portfolio since it also includes mutual funds.

How do I Contact E*TRADE?

You can reach E*TRADE Core Portfolios customer service by calling 866-484-3658 weekdays from 8:30 amd to 8:30 pm ET.

Best Alternatives

The robo advisor world is a crowded and competitive one. But despite the competition, E*TRADE Core Portfolios holds its own, offering a competitive service and nice variety of portfolio options for investors.

However, a lack of tax-loss harvesting is one downside for this robo advisor, as is the lack of in-depth portfolio customization options. And E*TRADE’s annual fees are slightly higher than some popular alternatives:

Options like Betterment and Wealthfront are ideal if you want slightly lower annual fees at just 0.25% per year. Betterment also has more ESG investing options, while Wealthfront offers more customization options. And both robo advisors have cash management accounts so you can earn meaningful interest on your idle cash. Finally, both Betterment and Wealthfront have tax-loss harvesting unlike E*TRADE.

You can also consider options like M1 and SoFi Automated Investing, which don’t charge annual fees. But if you’re an existing E*TRADE brokerage customer, sticking with its robo advisor might make sense. And the platform’s hybrid portfolio helps make up for the lack of in-depth portfolio customization.

Bottom Line

E*TRADE Core Portfolios offers most of the advantages that are typical of robo advisor investment management platforms. However, the fees are a little bit above the norm, and a tax-loss harvesting service would be a good addition to the mix.

As a broker, E*TRADE is one of the best in the business. Its robo advisor is also a solid product, although it’s not the best option if you want the lowest possible fees and more portfolio customization.