Most of the time when you work with a robo advisor, you don’t really know what kind of companies you are investing in, which to most, doesn’t really matter. If you, however, are interested in investing in companies that are doing good for the world, whether it be via green products or disease eradication, you might be interested in using Swell. Swell Investing only populates its portfolios with companies that are doing good in the world, which is an attractive proposition, especially for the younger generation. The question: Does Swell actually do a good job at investing? We take an in-depth look at the service to learn more.
Swell Investing utilizes the concept of impact investing. This is a method of trading with a goal of making a profit by investing in and owning companies that meet the investor’s socially conscious criteria.
Swell Investing gives its customers a selection of portfolios in which they can trade. These portfolios are not mutual funds or exchange-traded funds (ETFs). Each portfolio is a separately managed account (SMA). This is one of the differences that Swell Investing provides; its investors legally own the companies listed in their portfolio. If you’re invested in a mutual fund or ETF, your investment means you own a company, which, in turn, owns the securities found in the fund.
The selection of portfolios in which customers can invest through Swill Investing consists of six impact investing themes. These general themes include renewable energy, green technology, disease eradication, clean water, zero waste and healthy living.
The feature that stands out the most when looking at Swell Investing is its themed portfolio packages. Each of the portfolios caters to a specific socially conscious investor.
The Healthy Living portfolio offers investment in companies whose products and services promote active, healthy lifestyles. Included here are companies that sell organic foods and supplements, fitness equipment and technology, fitness facilities and athletic apparel.
In the Clean Water portfolio, there is an assumption that potable water demand will outstrip available supply in the coming years. Investors in this portfolio support companies that conserve water and work to clean water sources. Also found in this portfolio are companies that build water infrastructure.
Swell Investing’s Disease Eradication portfolio offers investments in companies that are working toward curing health problems such as tuberculosis, cancer and malaria. Investors can also invest in pharmaceutical and biotech firms.
In addition to its unique themed portfolio format, Swell Investing charges no commissions, either for the sale of an SMA or purchase of one. Equity trades made within an SMA are also commission-free. There are no annual fees charged, and closing an account will not accrue charges.
The focus of Swell Investing is to help its investors and traders invest in companies that share a socially conscious worldview. Its purpose is to deliver profit while providing a investment platform of purpose. Swell selects the stocks for its portfolios with the themes of each in mind.
When browsing through customer reviews for Swell Investing, there are positive and negative points cited. An investor drawn to Swell based on its positive, future-oriented premise to investing should also consider the drawbacks that can come with socially conscious investing.
In short, using a robo-advisor platform that concentrates investments in mostly small, U.S.-based companies means most investors are going to experience some drastic swings in their portfolio valuation.
Another concern found in Swell Investing reviews is the question of tax considerations. Swell does not offer tax-sheltered accounts, such as IRAs. This means investors are responsible for paying taxes on their accounts. Combining the tax responsibility with the 0.75 percent management fee means Swell can lean toward the expensive side in investment choices.
A Swell Investing review is likely to tout the company’s vision for socially responsible investing. The focus on companies that concentrate on building a positive future around the globe is a drawing point for many.
Swell Investing’s portfolios are not compiled by stock pickers. Instead, the company uses algorithms designed to capture the best of socially conscious companies. The data used by Swell is objective, which gives investors confidence that their investment choices correlate to the positive investing theme of the portfolio they’ve chosen.
The bottom line when reviewing Swell Investing is the issue of control over investments. As a robo-advisor in an online forum, Swell uses its algorithms to choose the stocks it offers and the investing theme. Investors can go along with the choices or not. This can be either an advantage or a disadvantage, depending on how much control an investor feels he should retain.
If socially responsible investing goals temper your interest in investing, then Swell Investing’s proud bias toward small cap stocks is an excellent selection for an after-tax investment strategy. If social responsibility isn’t the driving narrative to your investment practices, Swell Investing may not be the best choice if you’re in the market for a robo-advisor.
When choosing Swell Investing, it is imperative to remember that there will be minimal interaction with a live human on a phone call or Skype. Swell’s preferred method of communicating is email; this sets the tone for the customer service you can expect.
In the future, if Swell adds increased functionality to its offerings, such as increased diversification options and a selection of retirement accounts, it could prove to be the robo-advisor to beat among investors building their portfolios around socially responsible investments.
Swell Investing has only been around for a few years, making it the new kid on the block when it comes to online robo-advisors. It is not a large, complex company; it is a small company with large company aspirations. Its goal is to offer better investing options to people concerned about where their money goes.
The potential is there for great things; only time will tell if Swell Investing is a model to emulate.
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