Do You Know What is In Your Robo Advisor Porfolio...and Why ?

More on the major differences in portfolios among the major Robo advisors something I have written about several times previously. from the WSJ

Your Robo Adviser Is More Active Than You Think

They’re supposed to be straightforward investments run by algorithms—not a manager. But there’s still a lot of human judgment involved

there’s a crucial step here that isn’t always obvious. Algorithms manage the portfolios, but they don’t choose what goes into the portfolios in the first place. People do. That means the robo advisers aren’t always passively mimicking the allocation of assets on the global market; human managers are often making active bets on certain sectors, and those bets can make products from different advisers sharply different from each other

Here is a graphic that shows the differences in allocations

Drilling down for the differences in the portfolios shows the following:

Around 40% of the Vanguard stock allocation is in international stocks, ,,,The foreign-bond exposure also falls short of the global asset portfolio.

Among the robo advisers, Betterment has the international-stock exposure that most closely matches the global market, 50% of its equity allocation. Betterment also puts 8.2% of its equity allocation into emerging markets, close to the emerging-markets share of the MSCI All Country World Index. On the bond side, Betterment had 45% of its allocation in international bonds—the highest of all the portfolios we examined

Wealthfront has the second-highest foreign-bond exposure, 38% of its debt allocation. It’s also noteworthy that all of Wealthfront’s allocation to foreign bonds is in emerging-markets bonds via the J.P. Morgan USD EM Bond ETF, which owns bonds denominated in U.S. dollars and doesn’t impose currency risk on its shareholders. That’s clearly an active bet on emerging-markets debt.

Real-estate holdings

The Wealthfront portfolio also stands out by having 17.7% of its stock allocation in emerging markets—the highest in our survey—and 13% of its assets in real-estate investment trusts, ... . The only other portfolio in our survey with dedicated REIT exposure (a more-modest 5%) was an offering from Charles Schwab ’s SCHW 0.41% Schwab Intelligent Portfolios.

Schwab had 44% of its equity holdings in international stocks, and 9.3% in emerging markets, the second-highest allocation among the portfolios we examined. In terms of debt, the Schwab offering had nearly 28% of its bondholdings overseas, with more than 10% in emerging-markets debt—both figures roughly the same as the Vanguard portfolio.
Finally, the Schwab portfolio was unique in our group for having 5% of its portfolio in commodities—precious metals, specifically—and 12% of its portfolio in cash.

Readers of this blog know that I am uncomfortable with many of the asset classes that show up sometimes to a large extent in these portfolios. Specifically I would avoid REITS,commodities and emerging market bonds ..in fact all non US bonds...and I favor holding only Asian emerging markets

As the article concludes it is certainly clear that:

hiring a robo adviser isn’t as simple an investment solution as some might think. Even low-cost indexing can mean portfolios different enough that they need some investigation.