Amerivest Revisited

Yesterday I spent a little time on the Amerivest website to see what, if anything was new.

Not much has changed since I last wrote about the service. Fidelity's ETF product allows to you implement one of their portfolios, tweak one of theirs or create your own blend. Fido has a total 150 ETFs that to accommodate clients.

Amerivest has 16 to choose from, 14 equity and two fixed income ETFs. Amerivest walks clients through a risk profile process that was not particularly unique but there was one question that stuck out.

One asked what you would do if your ETF portfolio lost 1/3 of its value in the first year, stick with it or make changes? I'm hard pressed to suggest anyone make no proactive changes to a portfolio in a market that is on its way to losing 1/3 of its value.

Every risk tolerance, five in all, they have offers the same set of ETFs just in different amounts. Here is an example of what I mean. High risk weighted 15% in iShares S+P 500 (IVV). Moderate high risk weighted IVV at 11%, moderate weighted it at 7%, low moderate 5% and low at 4%. The other equity ETF were iShares Russell 1000 Value (IWD), iShares Russell 2000 (IWM), iShares EAFE (EFA) and iShares Emerging Markets (EEM). There are four substitutes for IVV, three for IWD, and one each for EFA and EEM.

The fixed income ETFs are SHY and IEF and there is no substituting these.

The extent to which investors are limited is strange. I am sure I'm unfairly biased. That said, Amerivest doesn't begin to take advantage of what it available in the ETF market place. If you are interested in only one type of product, ETFs, then the Fidelity offering runs circles around Amerivest. I am shocked how little progress has been made since I first wrote about this in late December.

All ETF portfolios make sense for accounts with less than $100,000 where individual stock risk is too much for the account holder. Accounts between $100,000 and $200,000 probably calls for a blend of individual stocks and ETFs. Obviously this is just my opinion. There are people with $20,000 that let it all ride on one tech stock and at the other end of the spectrum are people with seven figures that are happy to have a salesman over diversify them with a bunch of open end funds.