Revisiting My Schwab Robo Portfolio

December 17, 2015

On March 9 of this year, Schwab launched its robo advisory Intelligent Portfolios with no advisory fees. I couldn’t figure out any way to see exactly what funds were included and in what proportions without buying into it. Thus, I bought an Intelligent Portfolio on March 30 and wrote about a personal look at Schwab’s robo advisor. I held on to my Schwab Intelligent Portfolio, though, in some ways, it’s not looking all that intelligent.

A Little Background

I selected a risky portfolio in order to keep less cash. About 18% of the portfolio was in cash and bonds. Its characteristics were:

  • A total of 15 ETFs plus cash were used to construct the portfolio
  • Schwab funds and cash held at Schwab represented about 82.4% of the value of the portfolio
  • Expenses averaged 0.27% and ranged from 0.04% to 0.48% annually
  • The 10% of the portfolio located in bonds was in lower credit quality, although the local currency bond was technically investment grade at BBB-

The full lineup and weighting when I originally wrote about it was as follows.

Fund Ticker Shares Held $ Market Value % of portfolio % Expense Ratio
iShares Gold Trust IAU 20 229.6 4.49% 0.25
Schwab International Small-Cap Eq ET SCHC 7 220.22 4.30% 0.18
Schwab Fundamental Intl Lg Co ETF FNDF 19 526.68 10.30% 0.32
Cash CASH$ 374.93 374.93 7.33%
Market Vectors® EM Local Currency Bd ETF EMLC 15 304.65 5.96% 0.47
Schwab Fundamental Intl Sm Co ETF FNDC 11 309.65 6.05% 0.48
iShares 0-5 Year High Yield Corp Bd SHYG 5 246.62 4.82% 0.3
Schwab US REIT ET SCHH 4 158.4 3.10% 0.07
Schwab US Small-Cap ET SCHA 4 232.92 4.55% 0.08
Vanguard Global ex-US Real Estate ETF VNQI 2 118.1 2.31% 0.24
Schwab International Equity ET SCHF 11 347.05 6.78% 0.08
Schwab Fundamental US Small Company ETF FNDA 11 343.31 6.71% 0.32
Schwab US Large-Cap ET SCHX 9 454.59 8.89% 0.04
Schwab Emerging Markets Equity ET SCHE 8 210.96 4.12% 0.14
Schwab Fundamental Emerg Mkts Lg Co ETF FNDE 13 336.58 6.58% 0.47
Schwab Fundamental US Large Company ETF FNDX 23 701.27 13.71% 0.32
5,115.53 100.00% 0.27

In the original piece, I stated the Schwab Intelligent Portfolio has funds in which I'd never dream of investing, such as the Market Vectors J.P. EM Local Currency Bond Fund (EMLC | C-54). With an expense ratio of 0.47%, I suspected this would move more with foreign currency changes than the bond market. Before I wrote the original piece, I asked Schwab for the reasoning to include this fund, but received no response.

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