- Ease of Use
Every investor knows how important a good automated investment platform can be. If you’re in the market for a new automated investment and portfolio management platform you may have stumbled upon Hedgeable. With many interesting features and an active approach, Hedgeable has traders talking. Is Hedgeable right for you? Read our review to learn more.
Hedgeable is an automated investment and portfolio management platform. Founded in 2009 by Michael and Matthew Kane, the platform has grown to around 1,900 accounts and $80 million in assets under management. In contrast to other robo-advisors, Hedgeable takes an active approach to managing your money with frequent rebalancing to adjust risk.
How Hedgeable Works
Hedgeable is an automated investment platform that offers a few different types of portfolios. The most basic is the “Core-Satellite” portfolio, which takes a unique approach to the standard portfolio mix of stocks and bonds. With Core-Satellite investing, Hedgeable allocates the lion’s share of your investment into US equities and bonds, with the balance between these determined by your risk tolerance. The remainder of your money is diversified into “satellite” holdings, which include alternative investments such as real estate, currencies, commodities, high-growth stocks, and more.
In reality, this isn’t too different from what other robo-advisors like Betterment offer – your money is diversified across a wide range of asset classes to spread risk. The portfolio layout closely resembles M1 Finance’s “pie-style” portfolios. What makes Hedgeable different is that how your money is allocated is constantly changing in response to market conditions.
For example, you may have a 10% target of US growth stocks. When those stocks are trending upwards, Hedgeable may exceed that 10% target to take advantage of growth. But when volatility among US growth stocks is high, Hedgeable’s automated portfolio management software will rebalance your portfolio to reduce your exposure to these risky stocks. This kind of rebalancing is constantly happening across your investments, so that you are actively reacting to changes in risk.
However, the downside of this investment strategy is that it’s possible for your portfolio to overreact to risk. Selling assets during an economic downturn, for example, isn’t always a great long-term strategy if you are saving for retirement and have plenty of time to let the markets recover. So, Hedgeable is likely to perform better for medium-term investment goals and for people who may need access to their money during periods of economic turmoil.
An advantage to Hedgeable is that it also offers a few more tailored portfolio options. There are eight themes for socially responsible investing, which put some restrictions on the types of companies and assets that you will hold in your Hedgeable portfolio. Hedgeable also offers a high-income investing portfolio, which ratchets up your risk in exchange for investing in individual stocks, REITs, and MLPs.
Hedgeable also allows you to choose to invest a portion of your portfolio in alternative assets, including venture capital, Bitcoin, real estate, and commodities. Investments made directly in these alternatives using Hedgeable aren’t automatically risk-adjusted and rebalanced with the rest of your portfolio, though.
Hedgeable is only open to US citizens and requires a $1 minimum investment. You can open not only a standard investment or IRA account with Hedgeable, but also 401(k), trust, and corporate investment accounts.
Hedgeable Pricing and Fees
Hedgeable charges an annual fee ranging from 0.3% to 0.75% depending on the amount you have invested with the platform. The vast majority of investors will pay upwards of 0.6% per year with Hedgeable.
That’s significantly higher than competitors like Betterment and Wealthfront, which charge fees of 0.25%. But, it’s actually not all that bad considering that your Hedgeable account undergoes a lot more buying and selling activity thanks to the active rebalancing. Trading fees are included in your Hedgeable annual fee, rather than taken out of your account.
Hedgeable also notes that ETF exchange fees, which average 0.15%, are not taken out of your account. Instead, they’re priced into the ETF’s share price during purchase, which means that you get the exchange fee back when selling out of the ETF.
Platform and Tools
Hedgeable offers an intuitive and relatively helpful overview of your account. You can get a quick overview of your portfolio’s performance over time with the dashboard, or use the analytics panel to directly compare your portfolio to indices like the S&P 500. That allows you to clearly see whether investing with Hedgeable is working for you over time, and it’s information that many other robo-advisors make difficult or impossible to find.
Importantly, Hedgeable also allows you to see what you’re invested in – at least at the asset class level. You can’t dig down to the level of individual stocks and ETFs (unless you’ve invested in individual stocks with a high-income investing portfolio), but you can see generally how your account is diversified.
Hedgeable also offers an iOS app, which largely replicates the web platform. However, note that there is no mobile app for Android devices available at this time.
Hedgeable doesn’t offer any information about it’s historical performance, which is a major red flag. Reviews from users are generally positive, but there is little commentary about how a basic Core-Satellite portfolio without customization would have performed with Hedgeable’s risk management strategy over the past several years.
Hedgeable takes a much more active approach to automated investing that competitors like Betterment and Wealthfront. Whereas your portfolio balance with those robo-advisors is largely constant, based on your risk tolerance determined at account setup, Hedgeable is constantly shifting your portfolio around to counter changes in risk and volatility in different asset classes. Since the company doesn’t offer performance information, though, it’s extremely difficult to tell whether this strategy is effective.
On top of that, Hedgeable offers a wider range of portfolio options than many other robo-advisors. You can choose to invest in any of eight socially conscious portfolio themes or in a high-growth portfolio. You also get the ability to invest in alternative assets like Bitcoin, real estate, and venture capital funds with Hedgeable.
Hedgeable accounts come with SIPC and FDIC protection and Hedgeable acts as a third-party custodian for your investments. However, it is worth noting that Hedgeable was censured by the SEC in 2018 for making false claims about its accounts and management practices.
Who is Hedgeable Best For?
Hedgeable is best for investors who need liquidity in their investments. The one obvious advantage to Hedgeable’s risk rebalancing strategy, in the absence of performance statistics, is that your money won’t be tied up during periods of economic turmoil. That doesn’t mean that you won’t take a loss, but rather that your money will already have been shifted to assets like money-market accounts and low-risk treasuries. In that regard, Hedgeable is better suited for medium-term investors who are worried about liquidity than for long-term retirement investors who would do better to wait out a recession.
- Automated rebalancing based on risk offers potential protection against market downturns
- Retain liquidity during recessions by automatically shifting money to safe-haven assets
- All trading and ETF fees included in annual account fee
- Eight socially conscious investing portfolio themes and a high-growth investment portfolio
- Directly invest in alternative assets like Bitcoin, venture funds, and real estate
- No performance information available
- Potential for realizing large losses at the start of an economic downturn or during periods of volatility
- Account fee is high compared to alternatives like Betterment and Wealthfront