Michael Venuto's firm provides unique ETFs that have returned as much as 60% for investors this year. He breaks down his process — and shares the 'anomaly' investors need to watch today.
Toroso Asset Management develops unique, actively managed ETFs, and its four funds are up an average of 26% in 2020. Cofounder, fund manager, and Chief Investment Officer Michael Venuto spoke to Business Insider about the firm's unique approach to market anomalies and what he's watching now. He also shared his thoughts on investing as the pandemic and economic recovery continue to play out. Click here to sign up for our weekly newsletter Investing Insider. Visit Business Insider's homepage for more stories.
Michael Venuto was living through any fund manager's worst nightmare: One of his biggest investments was plunging and nobody could figure out why. The investment was Newmont Mining, a gold producer. And even when the price of gold trended up, the stock kept going down, losing about 20% of its value between September 2004 and May 2005. Eventually he landed on a key reason for the sell-off. "State Street had launched GLD, the first-ever direct exposure to gold," Venuto told Business Insider in an exclusive interview. "That was an epiphany moment where the firm recognized that, regardless of whether or not we ever got into the ETF business, the world of ETFs was going to change investing. " If experience is the best teacher, painful experiences might be the best of the best. Venuto and his employers started investing in ETF startups. Ultimately he struck out on his own and co-founded Toroso Asset Management in 2012. He's the firm's chief investment officer and manages one of its four funds. "Toroso's original thesis was somebody needs to look at this ETF market and do security selection, go beyond what the name and expense ratio says, and really figure out what's in these things and where the anomalies are, where the mistakes are, how to make them better," he said. That idea of anomalies — incredibly important numbers or market errors — is at the center of a lot of what Toroso does. The firm's ATAC Rotation Fund, for example, looks at a single indicator tracking the performance of utility stocks and Treasury bonds, and either goes 100% risk-on or 100% risk-off depending on what it says. That fund, managed by Michael Gayed, is up 60% this year. Cumulatively, Toroso's funds posted an average return of 26% in 2020, as of August 14. That includes Venuto's Amplify Transformational Data Sharing ETF, which invests in blockchain-themed companies, which is up 28%. From Venuto's point of view, the biggest investing anomaly in 2020 is an obvious one: The fact that the stock market and the economy have gone in dramatically different directions. But the most important one for him, and for investors, is a figure with a Halloween-themed name. "This year we really focused on a new anomaly related to COVID that we call the zombie score," he said. The Toroso team created that measurement based on the vulnerability of different industries to the continuing effects of the pandemic. The 25 most threatened industries, like airlines and mall operators, get high scores. The firm is steering clear of ETFs with high zombie scores, and Venuto warns investors that even if those companies survive, they might be very unhappy with the outcome. Like investors in many troubled companies during the 2008-09 Financial Crisis, they might end up watching their investments lose all their value. "The Robinhood crew, the do-it-yourself investors that have poured money into jets or airline stocks and have made big gains," he said. "Taxpayers are unlikely to be okay with bailing out the shareholders ... The shareholder is probably the last one holding the bag, and it didn't work out great for the shareholders of Lehman, GM, Ford, CIT Group, or any of those." He advises investors to be wary about owning too many small- and mid-size company stocks, as those companies in general have higher zombie scores. He also cautions about "over-diversifying" and says it's a better idea to bet on best- and worst-case scenarios for the economy and the themes that matter the most. "The way to go right now is to move towards active management, towards barbell-ing," he said. "Not over diversifying, but owning both the things that can do well in the good scenario and the things that can do well in the bad scenario and leaving that middle out." He says that would include themes like telemedicine, work from home, e-sports, and the blockchain in a best-case recovery scenario, and gold and Treasuries if things go badly. Read more:
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ETFs and mutual funds can instantly diversify your portfolio, but they differ in how they're traded, managed and taxed. Here's what you should know.
Summary List Placement ETFs, or exchange-traded funds, and mutual funds have a lot in common. Both...Summary List Placement ETFs, or exchange-traded funds, and mutual funds have a lot in common. Both investment products pool investors' money into a collection of assets — typically stocks, but can be other assets like bonds, real estate, and commodities. Geared towards individuals, both offer a low-cost, diversified way to invest. But ETFs and mutual funds also hold important differences, especially in the way they're traded and managed, and what they charge and how they're taxed. What is a mutual fund? A mutual fund is a group of assets like stocks or bonds that you can purchase by pooling money with other investors. They are run by a professional portfolio manager who selects the fund based on a published investing strategy, so all the investors (and regulatory bodies like the SEC) know what they're getting when they invest. As of 2019, there are nearly 8,000 US-based mutual funds with total assets worth a staggering $21.3 trillion, according to Statista. Mutual funds offer plenty of benefits, from their affordability to the fact that professionals do the research for you. They also help diversify risk: You buy a fund with many different assets to avoid getting burned if any individual asset loses its value. Mutual funds are intended to be long-term, buy-and-hold investments. What is an ETF? Like a mutual fund, an ETF is an investment vehicle that combines money from many investors into a pool to invest in stocks, bonds, and other assets. Developed in the mid-'90s, ETFs are younger than mutual funds, but their number has exploded over the last 10 years. As of 2019, there are over 2,000 ETFs based in the US, with approximately $3.4 trillion in assets. Unlike mutual funds, however, ETFs trade daily on stock exchanges — which means that they can be turned over early and often, though they are also suited to a long-term investment strategy. If the aim of mutual funds is to beat the market, the aim of ETFs is often to follow the market. The majority of ETFs are index funds, meaning their portfolios mirror the holdings of a particular segment of the stock, bond, or commodity markets, be it a general one like the S&P 500, or a highly specific one, like biotech. The main differences between ETFs and mutual funds The diversification that ETFs offer makes them very similar to mutual funds. But when figuring out which is right for you, there are a few key differences worth knowing. 1. ETFs and mutual funds are sold differently If you have a brokerage account, either at a traditional full-priced broker, a discount broker, or an online trading app, you can buy and sell ETFs. You may have to pay broker fees per transaction, which can add up if you're buying small quantities often. In contrast, you buy a mutual fund either through a brokerage or through the investment company that owns and manages it. Time was when these investment companies wouldn't offer funds from other firms, only their own (does a Nike store sell Reeboks?). But over the last 10 years, as they've evolved into "financial services providers," some of the larger players — think Vanguard or Fidelity — have started offering other fund families, too. 2. ETFs and mutual funds are priced differently Mutual funds set their prices only once a day after the markets have closed. The price of a mutual fund share is technically known as the net asset value (NAV) since it represents the combined worth of the entire portfolio, not just a particular holding. ETF share prices are like any stock share price: continually changing throughout the day, based on buying and selling in the market. So they can be more volatile than mutual funds. 3. Mutual funds are actively managed, while ETFs are typically passively managed For the last couple of decades, mutual funds have offered active money management: financial pros — fund managers, backed by analysts — who pick and choose investments, trying to deliver market-beating returns. And ETFs have been the vehicle of choice for passive, auto-pilot investing — following an index or other group of assets, on the grounds that nothing outperforms the market overall. Recently that dichotomy has changed somewhat: You can find many actively managed ETFs, and if you want passively managed mutual funds, you can find those too. However, ETFs remain the darlings of robo-advisers and automated trading platforms. If you have an online investment account, like one from Betterment, Merrill Edge, or Vanguard Digital Advisor, odds are it's investing your money in index ETFs. 4. ETFs are cheaper than mutual funds Mutual funds are generally more expensive than ETFs. They require more human power to operate, which means they charge larger fees to pay their managers and commissions to pay salespeople. While they're spending less money on marketing than they have in the past, many funds still charge sales commissions called "loads." Other fees include redemption fees, exchange fees, account fees, and management fees. For example, in regards to equity mutual funds, the average expense ratio — as these fees are collectively called — is 1.24%, according to the Investment Company Institute (ICI). All these fees add up and cut into the total return of the fund. With ETFs the only commission you pay is to your broker, and since 2018 many brokers have waived transaction fees and commissions. Because they're so often passively managed, ETFs generally have lower expense ratios, as low as 0.03% The average is 0.49%, according to the ICI. 5. Mutual funds have higher minimums Mutual funds generally demand a minimum investment, ranging from a few hundred dollars to four — or even five figures. With ETFs, there is no minimum investment, and the price is whatever a single share costs on the exchange at that time. 6. ETFs have tax advantages ETFs are a little more tax-friendly than mutual funds, which also brings down the total cost of owning them. When a mutual fund manager sells an asset for a profit, the holders of the fund are liable for a portion of the capital gain on that sale, even if they still own the fund itself. Because the buying and selling that regulates the price of the ETF is done by outside parties ("authorized participants" in investment lingo) and not the fund itself, holders of ETF shares are not liable for capital gains unless they personally sell their shares at a profit. 7. Retirement plans prefer mutual funds When you have an employer-sponsored 401(k) or a 403(b) plan account, you're restricted to the funds offered by the plan manager. Those offerings overwhelmingly remain mutual funds. Although they technically can offer ETFs, many plans shy away from them due to compliance issues: Actively traded ETFs can come perilously close to being considered speculative investments, which are frowned on for retirement accounts. This is particularly true of 403(b) plans, which have more strict rules about what kinds of investments they can make. 8. You can unload ETFs faster Mutual funds being priced only once a day, at the end of the day, makes it hard to get your money out quickly — because you see the price of its underlying assets falling, for example. In contrast, you can sell an ETF any time during the trading day, like any stock. Of course, because they're so easy to buy and sell, you could be more likely to make a bad, emotionally driven move. The financial takeaway While they're both geared to individual investors, ETFs have become popular since the turn of the 21st century as a low-cost alternative to mutual funds. ETFs charge lower fees and have no minimum investment (other than the price of a single share). Still, outnumbering ETFs as they do, mutual funds offer more variety, and a chance to outperform the market. For investors who are saving for retirement, especially in an employee-sponsored 401(k) plan, mutual funds may be the best investment. For DIY investors, especially those who prefer to operate via an app or online, ETFs may offer the edge. Related Coverage in Investing: How to invest in mutual funds and grow your money for retirement, a bucket-list trip, or any other long-term goal An ETF is a type of investment that's easy to purchase and requires little management How to invest in index funds to build long-term wealth Warren Buffett thinks index funds are the best way for everyday investors to grow their money Experts say your office 401(k) is the best place to start investing. Here's how it works.Join the conversation about this story »
Investing feels more accessible than it's ever been. Whether you prefer a hands-off approach or...Investing feels more accessible than it's ever been. Whether you prefer a hands-off approach or love to pour over market research and make trades — or fall somewhere in between — the right investment app can make it that much easier to reach your goals. The best investment apps right now Brokerage Editor's rating (out of 5) Fees Best for E*TRADE 4.50 $0 trading 0.30% AUM fee; 0.65%-1.25% AUM fee for higher balances Fee-free trading and low-cost automated investing SoFi Invest 4.25 $0 trading No AUM fee 1.25% markup on cryptocurrency Fee-free automated investing and active trading Fidelity Go 3.88 $0 - $3/month 0.35%-0.50% AUM fee for higher balances No fund fees No-frills automated investing Robinhood 3.57 $0 trading Active investing Acorns 4.0 $1/month - $5/month Beginners Ellevest 4.5 $1/month - $9/month Goal-driven investing Charles Schwab Intelligent Portfolios 4.0 No AUM fee; $300 one-time + $30/month for higher balances Automated investing large balances In our search for the best investment apps, we considered what might be important to different types of investors, not the least of which is cost. You often need to spend money to make money, but it's possible to minimize fees and still maintain a quality investment strategy. Our list skews toward so-called robo-advisers — which use an algorithm to manage your investments — because, in many ways, they feel most accessible to average investors; fees and balance minimums are generally low and your big-picture goals can help create an individualized and diverse portfolio that doesn't require much ongoing maintenance. Table of Contents E*TRADE: Best investment app overall Why it stands out: E*TRADE is a one-stop-shop for investing. Whether you're a seasoned investor or a beginner, you'll find what you're looking for. E*TRADE recently eliminated all stock and ETF trading fees and offers over 4,000 no-load, no transaction-fee mutual funds. If you're not interested in self-directed investments, E*TRADE's Core Portfolios are a great option. After you fill out a risk profile to share your goals, time horizon, and risk tolerance, you'll get a recommended tax-sensitive portfolio of ETFs. You can further customize your portfolio as "socially responsible," which shifts your allocation to include an ETF with companies that have progressive social, environmental, and corporate practices, or "smart beta," which favors growth stocks in an attempt to outperform the market. To start investing, you'll need at least $500. If you're investing $25,000 or more, E*TRADE's Blend, Dedicated, and Fixed Income Portfolios are worth considering. In addition to a more customized portfolio, these plans include one-on-one advising with a financial consultant. Through E*TRADE's two mobile apps, you can access your accounts, make trades, view charts and research, and watch Bloomberg TV. Fees: For the active investor: $0 stock, ETF, and options trading For the passive investor: 0.30% annual AUM fee for a Core Portfolio (minimum balance of $500) For the high net worth investor: 0.65% to 0.90% annual AUM fee for a Blend Portfolio (minimum balance of $25,000); 0.95% to 1.25% annual AUM fee for a Dedicated Portfolio (minimum balance of $150,000); 0.35% to 0.75% annual AUM fee for a Fixed Income Portfolio (minimum balance of $250,000) Account types: Individual, joint, and custodial brokerage accounts; traditional, Roth, and SEP IRAs (includes rollovers) Look out for: While you're able to open an account and choose a Core Portfolio with $0 down, you'll need to fund the account with at least $500 to get started investing. Learn more about E*TRADE » SoFi Invest: Best fee-free investment app Why it stands out: You won't be charged any advisory fees, stock or ETF trade fees, or subscription fees to invest with SoFi. For those with a set-it-and-forget-it attitude, SoFi's automated investing platform will recommend a portfolio made up of ETFs, based on your risk tolerance. Once you decide which portfolio is appropriate, you can get started investing with as little as $1. You won't have to bother rebalancing your portfolio since SoFi will do it for you at least once a quarter, but if your goals or overall financial situation changes, you can adjust your portfolio and even set up an appointment with a SoFi financial planner at no extra cost. Keep in mind that you'll still have to pay fees to the funds you're invested in within your portfolio. Active investors don't pay transaction fees when buying and selling fractional shares, stocks, or ETFs. You can also invest in cryptocurrency but SoFi charges a markup of 1.25% on those transactions. SoFi Money (Member FDIC), a checking/savings account hybrid with a competitive interest rate, a debit card, and unlimited ATM fee reimbursements, can store money you're not ready to invest yet. Fees: $0 for automated investing and stock and ETF trades; 1.25% markup on crypto transactions. Account types: Individual and joint brokerage; Traditional, Roth, SEP IRAs (includes rollovers) Look out for: There are only five portfolio options available for passive investors, ranging from conservative to aggressive. Despite no advisory charges, you'll still incur fees from the ETFs included in your portfolio. Learn more about SoFi Invest » Fidelity Go: Best investment app for hands-off investors Why it stands out: Fidelity Go is an easy-to-understand investment app for those who don't want to spend a lot of time or incur too many fees building wealth. After answering a set of questions about your age, risk tolerance, and goals, a team of experts will select an appropriate portfolio made up exclusively of Fidelity Flex mutual funds, none of which charge additional management fees or fund expenses. That means you pay a flat 0.35% advisory fee, regardless of what you invest in. You only need $10 to get started investing, and the professionals behind Fidelity Go — not an algorithm — will rebalance your portfolio periodically. You can change your investment strategy at any time from seven different allocations ranging from conservative to aggressive. In August 2020, Fidelity changed up its pricing tiers and added an option for personalized financial planning. Fees: $0 for balances under $10,000 $3 a month for balances between $10,000 and $49,999 0.35% annual AUM fee for balances $50,000 and higher 0.50% annual AUM fee (minimum $25,000) for Fidelity Personalized Planning & Advice Account types: Individual and joint brokerage accounts; Traditional, Roth, SEP IRAs (includes rollovers) Look out for: There is customer support, but no option to connect with a human adviser one-on-one for financial planning unless you upgrade to the 0.50% AUM fee option. No tax-loss harvesting, which can be especially valuable for higher balances. Investments are limited to Fidelity Flex mutual funds, which may be limiting. Learn more about Fidelity Go » Robinhood: Best investment app for active investors Why it stands out: Robinhood is as simple as a commission-free trading app can be. Investors can buy and sell US-exchange listed stocks and ETFs (and fractional shares of both), options, and cryptocurrency without paying any fees. The minimum amount required to invest is just $1, but you need at least $25,000 in your account to day trade. For access to larger instant deposits, research reports from Morningstar, and NASDAQ market data, investors can upgrade to Robinhood Gold for a 30-day free trial and then $5 a month after that. The membership includes up to $50,000 in instant deposits, plus $1,000 of margin and a 5% interest charge on any excess margin used. Robinhood also has a no-fee, high-yield cash management account, which comes with a debit card and up to $1.25 million in FDIC insurance. Fees: $0 for daily trading of stocks, ETFs, options, and crypto; $5 for Robinhood Gold membership Account types: Individual brokerage Look out for: Robinhood has faced intensified public scrutiny throughout the coronavirus-induced market chaos. The New York Times reported that the app's gamelike interface encourages young and inexperienced investors to take too-big risks, often through "behavioral nudges and push notifications." After the suicide of a 20-year-old user who expressed confusion about the negative six-figure balance in his account after a complex options transaction, Robinhood announced a slew of changes, like adding more educational content around sophisticated options trading and hiring a specialist to assist users. Learn more about Robinhood » Acorns: Best investment app for beginners Why it stands out: A "micro-investing account" that lets you build your stake in the market a few cents and dollars at time, Acorns is one of the most approachable investment apps available. Portfolios are built around Modern Portfolio Theory to help investors achieve maximum returns at an appropriate risk level. As such, there are five pre-built portfolios, ranging from conservative to aggressive risk tolerance. Each includes up to seven ETFs from companies like BlackRock and Vanguard and is automatically rebalanced to maintain proper asset allocation. When you link your debit or credit card, Acorns will automatically round up each purchase to the nearest dollar and invest the unspent change in your portfolio. Through Acorns Found Money, an additional percentage of each purchase at select brands, including Walmart, Nike, and Airbnb, will be deposited into your investment account. It's like cash back, but the money goes directly toward your investments. For most people, those round-ups and additional retailer contributions don't add up to much, however, so we'd recommend supplementing with direct or recurring transfers to get the most out of Acorns. Note that Acorns recently restructured its subscription tiers, eliminating the $2 a month option. If you signed up for a $2 a month account prior to May 20, 2020, you will continue to pay that fee unless you change plans. Fees: Acorns Lite: $1/month for a brokerage account ($5 minimum to start investing) Acorns Personal: $3/month for a brokerage account, IRA, and checking account with debit card ($5 minimum to start investing) Acorns Family: $5/month for a brokerage account, IRA, investment account for kids (UTMA/UGMA), and checking account with debit card ($5 minimum to start investing) Account types: Individual brokerage account; Traditional, Roth, SEP IRAs; individual checking account Look out for: Acorns isn't as customizable as some of the other automated investing platforms. If you're looking to create your own portfolio so you can invest in specific companies or sectors, this investment app probably isn't right for you. Also, the monthly subscription fees may not seem high, but they could represent a hefty portion of your assets if you keep a small balance. Learn more about Acorns » Ellevest: Best investment app for goal-driven investing Why it stands out: Ellevest encourages you to build an investment philosophy around your goals, whether that's starting a business, having kids, splurging on a vacation or other big purchase, buying a home, retiring on time, or simply building wealth. Then, this female-forward online adviser takes it a step further and considers your gender, lifespan, and earning potential to create a custom portfolio of mostly ETFs. You can also opt for a socially responsible allocation, if that's important to you. As a fiduciary, Ellevest automatically rebalances and regularly updates your performance forecast, taking into consideration fees, taxes, and the occasional market crisis to show you whether you're on track to meet each of your goals — and what you can do to make up for it if you're not. The app also provides financial and career coaching and workshops — both within the membership offerings and à la carte — and most recently, banking accounts. Ellevest recently changed its pricing model and now charges a monthly membership fee ranging from $1 month to $9 a month. There are no additional investment advisory fees on top of the monthly membership, but there are underlying fees charged by the ETFs in your portfolio. Fees: Ellevest Essential: $1/month for a brokerage account, a no-fee checking account with a debit card, a no-fee savings account, and 20% off financial and career coaching sessions. Ellevest Plus: $5/month for everything included in Ellevest Essential, plus access to retirement planning specialists and help with account rollovers and 30% of coaching sessions. Ellevest Executive: $9/month for everything included in Ellevest Plus, in addition to up to six customized investment accounts for different goals, 50% of coaching sessions. Investment account types: Individual brokerage; Traditional, Roth, SEP IRAs (includes rollovers); checking and savings accounts. What to look out for: You'll have to spring for the higher-tier offerings if you want more specific guidance for your goals beyond "build wealth." Ellevest does not offer automated tax-loss harvesting, which can be valuable for investors with higher balances. As with any investment app that charges monthly fees rather than per-account advisory fees, it's important to note how much of your balance they represent. Learn more about Ellevest » Charles Schwab: Best investment app for auto-investing large balances Why it stands out: You'll find any type of investment you're looking for at Charles Schwab, from self-directed stock trading to mutual funds to retirement accounts, but it's the Schwab Intelligent Portfolio, the brokerage's robo-adviser, that ultimately outshines competitors. The Premium version requires a minimum investment balance of $25,000, but combines automated investing with ongoing financial planning. Your risk tolerance profile will help experts design a custom portfolio of Schwab ETFs that will be rebalanced regularly. All portfolios include a cash allocation, which is deposited in a Schwab high-yield account. A free add-on feature called Schwab Intelligent Income can help you generate a monthly paycheck from your brokerage or retirement accounts. You'll pay an initial planning fee of $300 to meet with a certified financial planner and a flat $30 a month for ongoing guidance whenever you need it, but no asset under management fee. Once your balance reaches $50,000, free tax-loss harvesting is available. There are also comprehensive online financial planning tools available that let you to link up various accounts to track your progress toward goals and forecast different scenarios on your own. Fees: Schwab Intelligent Portfolio: $0 advisory fee, but requires a minimum balance of $5,000 and does not include financial planner access Schwab Intelligent Portfolio Premium: $300 one-time financial planning fee and then $30 a month (minimum balance of $25,000) Account types: Individual, joint, custodial brokerage accounts; Traditional, Roth, SEP, SIMPLE, and rollover IRAs; trust accounts. Look out for: Minimum balance requirements disable anyone with less than $5,000 from investing in Schwab Intelligent Portfolios. As with any investment, you're responsible for paying the underlying fees in the ETFs in your portfolio. Learn more about Schwab Intelligent Portfolios » Others we considered and why they didn't make the cut Betterment: Betterment comes up short on financial planning tools available to the average investor and its advisory fee increases for account balances of $100,000 or more. Wealthfront: Wealthfront combines financial planning tools and robo-investing for a flat 0.25% advisory fee, but it also requires a $500 minimum balance to start investing, whereas Fidelity requires $10 and doesn't charge underlying ETF fees. M1: A good option for active or passive investors who want fee-free trading, fractional share investing, or custom portfolio building, but its research and guidance is not as intuitive or robust as some of the others. Wealthsimple: This investment app may be ideal for passive investors who want to invest in socially responsible companies, but the options are limited to three portfolios and the advisory fee is higher than competitors at 0.50% for balances under $100,000. TD Ameritrade: An incredibly research-rich investment app that recently slashed all trading fees, TD Ameritrade has a lot to offer, but its AUM fee for Essential Portfolios — its robo-adviser — is slightly higher than Wealthfront with the same investment minimum. Stash: Stash bundles a checking account, retirement accounts, and investments accounts together through a subscription model. It does make investing more accessible through fractional shares and customizable portfolios, but there are more cost-effective options for beginners. Ally Invest: This bank offers commission-free trading, but for portfolio investing there's a 0.30% advisory fee unless you keep at least 30% of your holdings in cash at all times. Vanguard: An undeniable leader in investing, Vanguard is a worthy competitor to E*TRADE and a few other stalwarts, but it doesn't have as many clear options for passive investors who want to create a portfolio to match their goals, and its investment minimums are relatively high. Stockpile: A fine option if you want to invest in small amounts to start, but trades cost $0.99. Merrill Edge: A convenient option for Bank of America users, but the lowest tier of managed portfolios command an annual fee between 0.30% and 0.45% on a minimum balance of $5,000. Frequently asked questions Why trust our recommendations? Personal Finance Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product, we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to. How did we chose the best investment apps? People may have varying risk capacities and financial goals they're working toward, but you'd be hard-pressed to find someone who doesn't prefer a cheaper way to invest. For that reason, cost was a huge factor in determining our list. To find the best investment apps, we set out to identify the companies that offer platforms that keep fees to a minimum (generally below 0.50% of assets under management, or AUM, for balances under $100,000) and offer a high-quality experience. In some cases, that means access to free financial planning tools — or financial planners themselves — and clear and easy-to-understand investment options. We compared nearly two dozen brokerages, placing heavy weighting on their advisory and trading fees, investment philosophy, investment options, and types of accounts available. User experience is also important, so we also looked at each brokerage's accompanying mobile app and scoured reviews on the Apple Store and Google Play to find out what regular users think of the product. Finally, we cross-referenced our research against popular comparison sites like Bankrate, the Balance, and NerdWallet to make sure we didn't miss a thing. What is the best investment app for beginners? In most cases, the best investment app for beginners is a robo-adviser that customizes a portfolio for you based on your goals and risk tolerance while keeping costs low, such as Fidelity, Acorns, or Ellevest. If you're just starting out investing, we don't recommend trading individual stocks and funds, unless you have guidance from an expert or a high capacity for risk. What is the best free investment app? SoFi Invest is a fee-free investment app accommodating both passive and active investors. There are no transaction fees on stock and ETF trades and no advisory fees for portfolio management. Investing through SoFi also gives you access to a financial planner at no additional charge. Keep in mind that you will pay fees to the funds you're invested in within your portfolio. Tanza Loudenback has been writing about money every day for more than three years. She is an expert on strategies for building wealth and financial products that help people make the most of their money. 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Jefferies is making 2 major shifts to its stock-investing strategy as the US lags a broader economic recovery. Here's how the firm says the new trades will help investors crush the market.
Jefferies strategist Steven DeSanctis says he's making two critical shifts to his approach as the US...Jefferies strategist Steven DeSanctis says he's making two critical shifts to his approach as the US struggles with the renewed spread of the coronavirus. He writes that the latest developments in the pandemic are negative for smaller US companies in two different ways. DeSanctis also believes a third shift into higher-quality, higher-returning stocks is imminent and could trigger huge returns. Click here to sign up for our weekly newsletter Investing Insider. Visit Business Insider's homepage for more stories. US stocks have been trouncing their overseas competition for years, and there were reasons to think it was going to happen again as the global economy got back on its feet. But some doubts are emerging as new cases in the US continue to increase. Jefferies small- and mid-sized stock strategist Steven DeSanctis says that's the reasoning behind one shift he's "disappointed" to make, as he's reversing a call in favor of US stocks that he made just three months ago. That's one of a pair of critical shifts DeSanctis is making as stocks enter a more uncertain phase following the huge rally that lasted for most of this spring. (1) Going global again In April, DeSanctis said he favored US stocks over international equities, but he says that position doesn't make sense today. "The US is struggling to keep virus under control while Europe and China have done better," he wrote in a note to clients. "We think the economic news in both Europe and China will continue to improve, while data in US will be mixed." If the failure to contain the virus hurts the US economy more than the economies of its peers, that's also going to affect the respective currencies of the US, Europe, and China. DeSanctis says that's likely to intensify the trends behind his new call. "Europe and China are getting back to full capacity with the US lagging behind, thus we think dollar could be weak and helps foreign more than domestic," he said. How to play it: Investors who find that approach compelling can enact it with exchange-traded funds like the iShares MSCI China Small-Cap ETF and the SPDR Euro Stoxx Small Cap ETF. (2) Size no longer matters After a powerful recovery for the smallest US companies, DeSanctis says he's no longer recommending them over large-caps. He explains that mutual fund managers still need to increase their exposure to smaller companies, which will help some stocks, but the dramatic outperformance of the last few months means their performance will be rockier. "The smaller small caps outperformed the largest by widest margin ever coming out of bear market," he wrote. "Valuations are NOT as attractive as they once were." How to play it: Investors who want to go up in size can target larger companies through the a fund like the Schwab US Large-Cap ETF, or they can adopt a size-agnostic equal-weight approach with funds such as the Invesco S&P 500 Equal Weight ETF. Bonus shift for the future: Quality will matter As he makes those two moves, DeSanctis thinks another shift is on the way. He's predicting a hard turn from lower-returning stocks into higher-returning names. High returns on equity are generally considered an important aspect of stock quality. Investors have reacted to this global healthcare crisis by buying healthcare stocks, and those companies tend to deliver lower returns than other parts of the market. He thinks that trend has gone too far, noting that the lowest-returners have become expensive compared to the stronger returners. "When we touched this level in the past, High ROE outperforms by an average of 5.5% over the subsequent three months, by 11.1% over the next six months, and a whopping 43.4% for the full year," he wrote. How to play it: Because of the overlap between quality and returns on equity, investors can apply that theme with funds like the Fidelity Quality Factor ETF and the Invesco S&P International Developed Quality ETF. Read more: GOLDMAN SACHS: These 17 trades can help investors maximize their gains from the stocks most affected by the US elections in November BANK OF AMERICA: Buy these 9 stocks poised to crush the market in any market environment as they spend heavily on innovation Michael Gayed's fund relied on just one market signal to book a huge profit when the coronavirus crushed stocks — and his returns are still soaring. He breaks down his simple approach to crisis investing. SEE ALSO: A high-growth fund manager returning 7 times more than his peers tells us how he's shifting from post-pandemic tech themes into 'real companies' — and shares 6 stock picks set to win the market's next phase Join the conversation about this story » NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly