Charles Schwab Intelligent Portfolio is an automatic investment advisory service which put up, examines and rebalances your portfolio so that there is no need not do anything for making plans for investment. This help you to set your income and saving goals, keep a track over them and work towards achieving them without any advisory fees, account service fees and commission charges. At the start up process all you have to do is just invest $5000 and build an ETF portfolio. To build and manage your portfolio Charles Schwab’s Intelligent Portfolio make use of advanced algorithms and take professional’s advice from Schwab’s investment Advisory Inc. and as a result of that you get a diversified portfolio which consists of low-cost ETFs specially selected by CSIA team.

After making choice of ETFs the experts looks after it and sees if these ETFs are providing consistency and diversity to the investors. As there are fluctuations in day to day market and value of holdings keeps on increasing or decreasing so as a result of these changes a situation may arise where there is a need to rebalance your assets i.e. buy underweight and sell overweight assets. Therefore this solution is solved with the help of Charles Schwab’s Portfolio investment, where there is daily check-in and automatic rebalancing of more than 20 assets types. So as a risk taker it reduces your chances of losing your invested amount.


How to Open an Account?

For opening an account there is a condition that you must have $5000 with Schwab already. Then you have to answer a 12 –step questionnaire which asks about your goals, time horizon and risk profile. All the questions which you answer regulate the stock/bond ratio and at the end generate your assets allocation. All the investments at Charles Schwab are SIPC insured and also intelligent portfolio supports all types of taxable and retirement accounts. All the accounts which hold more than $50,000 in taxable investment can take advantage of tax-loss harvesting.

Model of the Portfolio

There are nearly 20 kinds of ETFs which are checked and rebalanced with intelligent portfolio service and the basic aim of robo advisors is to take into account small investors which face problems while investing money. The selection of ETFs is based on the 12 step questionnaire answered by you. All the ETFs are Schwab Funds and for secondary ETFs which are not funded can be used depending upon unspecified conditions.

The main focus of portfolio is to value with market-cap weighted ETFs and this is the reason why greater percentage of small-cap lie within the portfolio.


Whitepapers in Charles Schwab Intelligent Portfolio

  1. Goal Tracker Whitepaper
  2. A Goal Tracker is a tab in Schwab Intelligent portfolio dashboard which helps to set and track a goal for investment in your account. It shows how your portfolio works and provide you with various outcomes range so that you get to know how much near you are to your future goal. The goal tracker makes use of the long-term estimates and shows you that either you are on your target or there is any need to make changes to reach your target. The Goal tracker helps to control investment amount, which is based on risk profile and planned contributions every month. It also helps you to generate retirement income and provides advice on how much monthly withdrawal you need to carry out in order to last long your income stream.


  3. Selection of ETFs for Schwab Intelligent Portfolio
  4. The main benefits of using ETFs as an investment tool for Schwab’s Intelligent portfolio are that they are totally transparent than mutual funds and any other investment tool. The second reason to choose ETFs is that they have low expense ratio. And the third advantage is that these are more tax efficient. Those ETFs are selected in Schwab’s Intelligent Portfolio which fulfils the basic standard for structure, liquidity and economic viability and from those ETFs which fulfil above three conditions only those are chosen which have least expense ratio and share prices below certain limits. However, exchange traded notes and limited partnerships are not eligible for Schwab Intelligent Portfolio.

  5. Asset Classes and ETFs
  6. In Charles Schwab Intelligent Portfolio more than 20 asset classes are included along with FDIC insured cash. The list of major asset class is given below:


    • US large Company Stocks
    • US large Company Stocks-Fundamental
    • US Small Company Stocks
    • US Small Company Stocks- Fundamental
    • International Emerging Market Stocks
    • International Emerging Market Stocks- Fundamental
    • The US High Dividend Stocks
    • Master Limited Partnership
    • nternational High Dividend Stocks and much more.

    The fixed income includes mainly US Treasuries, US securitized bonds, US Corporate high yield bonds, US Inflation-protected bond, preferred securities, bank loans, Investment grade Municipal Bonds etc.

  7. Allocation of Assets
  8. The allocation of assets in different categories such as large company stock, small company stock, international stock, cash investment and commodities is the basic feature of investment planning for many years. The main aim to allocate assets is to reduce the risk by making diversification in a number of investments which behave differently in diverse market conditions. As a result of this diversification, portfolio risk lowers down and can generate high wealth in long run.

  9. Tax-Loss Harvesting and Rebalancing
  10. As the taxes can take a big part of your investment in the taxable account the purpose of Schwab Intelligent Portfolio is to maintain the after tax and risk-adjusted rate of return of account holder. For this purpose, it makes use of an algorithm which incorporates both tax loss harvesting and rebalancing strategy.


  11. The Role of Cash Investments
  12. The cash investment provides higher stability, diversification and inflation protection. The cash allocation is decided according to the risk profile of the investor. The cash is invested in Schwab Intelligent portfolio by Savings sweep program. With the consent of clients, the free credit balance in their portfolio is swept to deposit accounts at Charles Schwab Bank where these investments earn a market rate of interest .The cash allocation in Schwab Intelligent portfolio is determined by the risk profile of investor i.e. the least risk investments hold the highest cash and high-risk portfolio holds the least cash. The amount of interest at Schwab bank is determined by an index. The interest rate is decided on the first day of each month and on last business day of that month.

    It is right to say that the Charles Schwab Intelligent Portfolio is the best and cheapest portfolio as this provides a number of benefits to their investors such as no fees, tax-loss Harvesting, Automatic Rebalancing and much more.