How Smart Should Robo-Advisors Be?
Answer: As much (or little) as they wish.
Earlier this year, one of the leading robo-advisors, Wealthfront, adjusted its investment strategy. (“Robo-advisor” being the argot for companies that sell automated investment advice.) Henceforth, the company reported, it would place some of its larger clients’ taxable assets into a risk-parity fund--“risk parity” being a hedge-fund-inspired technique that adjusts stock/bond exposures in response to movements in the financial markets, while employing leverage.