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Smart Portfolio

What is Smart Portfolio?

Smart Portfolio is a type of managed account offered by Passfolio Advisers LLC that is designed for clients who seek a digital, discretionary investment management experience. The platform relies on algorithms* to develop and suggest an investment strategy for helping you manage your money. Your experience takes place online - including providing information about yourself, opening your account, and tracking your investments.  

For a more in depth view of Passfolio Advisers LLC’s services, including fees, please view our Wrap Fee Brochure,  Advisory Agreement, and Relationship Summary.

* There is a risk that the algorithms and data input into the algorithms could have errors, omissions, imperfections, or malfunctions.

How does it work?

You start by telling us a few things about yourself such as your investment experience, risk tolerance, and time horizon. Once you do that, we'll suggest an investment strategy consisting of ETFs based on what we think is appropriate for you based on the answers you provided us. From there, you can explore other investment strategies that may be a better fit for you or accept our suggestion.

When activating Smart Portfolio, you have the option to choose the investment portfolio according to your investor profile or accept our suggestion.

Then just select the amount to be invested and let our Smart Portfolio do  the work.

We have 3 investment options: Conservative, Moderate, and Aggressive.

Conservative

People with conservative risk attitudes prefer little risk and low volatility in return for accepting potentially lower returns. Minimizing exposure of principal to loss or fluctuation is very important.

Investors with conservative risk attitudes will typically use more bond funds or cash in their portfolio than investors with riskier attitudes. While the risk of losing money due to poor market performance could be reduced with a conservative approach, this type of investing comes with other risks such as potentially not being able to build enough wealth to meet financial goals or even potentially not being able to keep pace with inflation to maintain the purchasing power of your investments. While having the benefit of potentially experiencing less ups and downs in the market, investors with conservative risk attitudes likely need to save more to reach the same wealth levels and meet the same financial goals as those that are comfortable taking more risk.

Moderate

People with moderate risk attitudes take some investment risk but are also wary of the downside.

Investors with these views towards risk tend to be more comfortable with investment volatility today for the potential of better outcomes in the future, but they will not go to the same levels of equity risk taking as aggressive investors. Relative to conservative investors, there may be a reduced risk of not being able to build enough wealth to meet long-term retirement goals or even potentially not being able to keep pace with inflation, but there is an increased risk of portfolio volatility and short-term losses.

Aggressive

People with aggressive risk attitudes are comfortable with risk taking and dealing with shorter term market volatility to have a chance to reach higher levels of wealth in the future and meet long-term investment objectives.

After choosing your investment option, just choose the amount you would like to invest and that's it! Our Smart Portfolio will manage this investment portfolio according to the initial percentages of the chosen investment option.

Smart Portfolio's job is to rebalance and maintain the investment percentages as suggested in the option you selected.

Example:

You chose an investment option with assets ABC and XYZ, both with 50% allocation, and both with a market value of $100,  in other words your investment has a value of $200.

If asset ABC appreciates ​​to $150 it means your investment is now worth $250, but asset ABC now represents 60% of your total investments ($150 / $250 = 60%). Smart Portfolio will sell part of the ABC position and reinvest in XYZ to bring the allocation back to 50% for each asset. In this example Smart Portfolio would sell $25 ABC, and buy $25 XYZ, totaling $125 ABC and $125 XYZ.

The same logic applies in the scenario where one of the assets depreciates. In this case Smart Portfolio would make a partial sale of assets that appreciated, and then buy more of the asset that depreciated so that the allocation returns to the percentage indicated by the initial investments option selected. The rebalancing is typically done on at least a quarterly basis.

How to Activate?

You can turn Smart Portfolio on and off in your app at any time.

To activate Smart Portfolio is simple! Just follow the instructions below:

  1. Open the app and, under your portfolio graph, click on the “Smart Portfolio” tab.
  2. Carefully read the information and agreements about Smart Portfolio and click continue.
  3. Tell us about yourself and answer questions about your investment objectives, risk tolerance, and investment experience.
  4. We suggest an investment strategy or you can choose the type of investment portfolio according to your profile. Swipe the screen to the end and click continue.
  5. After choosing your profile, select the amount to be invested and click on continue.
  6. Click “Done” and your new Smart Portfolio will be activated!

How to change values?

  1. Open the app and, under your portfolio graph, click on the "Smart Portfolio" tab.
  2. Click increase (deposit) or decrease (withdraw) to change the value as you prefer.
  3. Click on the value field and enter the value you want and click continue.
  4. All set! You changed the value of your Smart Portfolio investment account.

Fees:

Passfolio Advisers charges a  0.75% annual advisory fee. The amount is billed monthly every 15th and is deducted directly from the value of your investment portfolio, so you don't have to worry about adding more money to cover the cost of Smart Portfolio. The fee is proportional to the time of use of the program and the total amount invested on the day of collection.

That is, you divide 0.75% by 365 days to get the daily rate, multiply by the amount applied on the billing day, and then multiply by the number of days used.

Example:

You have a $100 portfolio. Smart Portfolio was used for 10 days of the month. The fee will be calculated using the following formula:

Smart Portfolio Fee = (0.75% annual fee /365 days) * 10 days used * $100 = $0.02

*Example is for illustrative purposes. Actual fees may vary.

In addition, there may be other costs associated with the underlying investments of the portfolio.

Keep in mind, closing your account by withdrawing your entire balance will result in a termination of the managed account service, at which time you will be charged a prorated portion of the advisory fee for the time your account was managed.

Is there a minimum amount to invest?

The minimum amount to invest with Smart Portfolio is $100. This value needs to be maintained, this means if you invest $100, you won’t be able to withdraw $50, but you can alternatively close your portfolio and withdraw all your balance!

How to disable Smart Portfolio?

When you deactivate your Smart Portfolio all positions will be sold and this value will be available in your stock portfolio buying power within 2 business days.

To disable Smart Portfolio is simple! Just follow the instructions below:

  1. Open the app and, under your portfolio graph, click on the "Smart Portfolio" tab.
  2. At the bottom of the screen, click on "Decrease".
  3. On the next screen slide all the way down and click on “deactivate” and then confirm it.
  4. The money will typically be credited to your buying power in the stock account after the settlement period (two business days).

Keep in mind, closing your account by withdrawing your entire balance will result in a termination of the managed account service, at which time you will be charged a prorated portion of the advisory fee for the time your account was managed.

Can my account fluctuate in value?

The investments in your Smart Portfolio account are subject to the ups and downs of the market. When the markets decline, or the investments in your account declined in value, you may lose money.

What if my investment goals change?

You’re free to change your account objectives by visiting your account profile.

We base our suggestion for the investment strategy for your account on the information we have on file for you. In order to help us provide a strategy that’s appropriate for your goals and your risk tolerance, it’s important that you keep that information up to date.

Once I fund my account, how long before my money is invested?

We'll usually begin investing according to your investment strategy in up to 2 business days.

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