Axos Managed Portfolios review 2023
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Axos Invest: Best for
- Low annual management fee
- Portfolio choices
- New investors
Axos Managed Portfolios brings a solid robo-advisor with premium features to a crowded field, and does so at a reasonable cost. In fact, Axos can boast that its management fee is cheaper than the industry standard, albeit barely cheaper, and yet it offers features such as tax-loss harvesting that are the province of top robo-advisors. Plus, Axos brings a wide range of investments, with more than 30 asset classes, including more niche offerings such as socially responsible funds and blockchain-focused offerings. Investors can get started with a low minimum of $500, and the managed portfolio makes a solid pick for those who have a bank account or another investment account here, allowing them to consolidate it all with one provider. The downsides are few – such as limited account types – but they could be deal breakers, depending on your situation.
If you need a variety of account types, a robust cash management account and tax-loss harvesting, then check out Wealthfront or Betterment, two leaders in the space. Fidelity Go is another robo-player that allows you to consolidate your accounts with one integrated company.
Axos Invest: In the details
Pros: Where Axos Managed Portfolios stands out
Just like other robo-advisors, Axos Managed Portfolios builds an optimal portfolio for you based on your answers to a handful of questions related to your investment goals. Individuals comfortable with some risk-taking and working toward long-term goals will have portfolios weighted more toward stocks, while more risk-averse investors focused on short-term goals will hold more fixed-income assets.
But Axos also allows investors to customize their portfolios to align with their personal interests, choosing from more than 30 different asset classes. There are traditional choices, such as U.S. and international stocks, as well as government and corporate bonds, that make up the bulk of core portfolios. But you’ll also have the option to invest in niche areas like blockchain technology, socially responsible companies and businesses led by women.
This level of customization is rare among robo-advisors and gives something for Axos to hang its hat on. If you’re passionate about how your money is invested, Axos gives you plenty of options to choose from.
Axos also sets itself apart by charging one of the lowest annual management fees in the industry. Investors will pay a flat rate of 0.24 percent each year, which means you’ll pay $24 for every $10,000 you have invested. This annual fee comes in just below that of robo-advisor leaders Betterment and Wealthfront, which each charge 0.25 percent for their basic service.
Keeping costs low is one of the most important things for investors to do because costs eat directly into the investment returns you ultimately earn. The annual management fee at a traditional financial advisor can be around 1 percent, making robo-advisors an attractive alternative.
Investors who use robo-advisors to build their portfolios will also pay fees for the ETFs that are used. High fund fees can sometimes dilute the benefit of a low annual management fee, but that’s not the case with Axos. Fees will vary based on the funds selected for your portfolios, but Axos uses many ETFs with expense ratios of 0.12 percent or less. Many Vanguard ETFs are available including the popular Vanguard Total Stock Market ETF (VTI), which comes with an annual fee of just 0.03 percent.
Axos also offers fractional share investing on both new purchases and reinvested dividends, something not all robo-advisors do. This feature will be especially useful to new investors who may not have significant sums to invest yet. Fractional shares allow you to invest the full amount you’d like to, while not having to worry about purchasing full shares of the ETFs you’re buying.
Fractional shares help to keep your portfolio invested along your desired allocations, maintaining the appropriate weights across your different investments without having to wait until you have enough money to buy a full share.
Tax-loss harvesting and rebalancing
Tax-loss harvesting and automatic portfolio rebalancing are becoming more and more of an industry standard, but it’s nice to see Axos offer these key features. Axos’ tax-loss harvesting automatically sells investments that have experienced losses and replaces them with similar ETFs, allowing your portfolio’s exposure to stay the same, while realizing a loss that will help lower your tax bill.
Axos will rebalance your portfolio when an ETF swings 5 percent or more from the desired allocation. Rather than just selling the ETF that has appreciated beyond its desired weighting, Axos will first use dividends and new deposits to increase the allocations to other funds in order to minimize the capital gains that are generated as a result of rebalancing.
Cons: Where Axos Managed Portfolios could improve
Account types available
While Axos has many features that put it alongside leading robo-advisors, it is severely lacking in the number of available account types. It currently offers individual accounts as well as traditional and Roth IRAs. Offering just three account types puts Axos near the bottom of the industry in this area and compares poorly with top robo-advisors that offer seven or more different account types.
Axos would be wise to add additional account offerings such as joint accounts, SEP and SIMPLE IRAs, custodial accounts and education savings accounts.
Cash management account
While a robust cash management account isn’t a part of Axos Managed Portfolios, you can open one through Axos Bank. That move is easy enough and allows you to keep your business under one roof, but Axos doesn’t offer an interest rate that’s as competitive as those at top robo rivals. Plus, Axos requires you to do a few things to even reach that top advertised rate.
To earn the first 0.40 percent, you must enroll in direct deposit and funnel at least $1,500 per month into the account. To receive the next 0.30 percent, you must either enroll in Axos Personal Finance Manager or use its debit card at least 10 times each month. The next 0.40 percent comes from maintaining an average daily balance of $2,500 in your Axos Managed Portfolios account as well as in a self-directed trading account. The final 0.15 percent comes when you use your cash management account to make a mortgage, personal or auto loan payment. It all adds up to 1.25 percent, below what rivals have been offering.
If this all sounds complicated, that’s because it is. Other top robo advisors offer competitive cash management accounts without all the hoops to jump through.
While Axos has low costs in terms of its annual management fee and the funds it uses to build portfolios, it does charge account fees for a few actions. You’ll pay a $40 fee for terminating an IRA and a $75 transfer-out fee. These fees may seem small, but if you have a small portfolio they can end up being more than what you pay in management and fund fees combined.
If you’re worried about potentially having to pay these fees, you might consider Fidelity Go or Wealthfront, where you won’t face any account fees.
Customer experience and tools
In other areas, Axos offers a competent but not compelling feature set. For example, customer support is available from 11 a.m. to 8 p.m. ET Monday to Friday, or 8 a.m. to 5 p.m. PT, which is basically just standard hours, nothing special.
It’s a similar setup with available tools, such as retirement calculators to help you determine what type of 401(k) to use or another to figure out your retirement savings. They’re easy to use, pleasant to look at and helpful, but Axos could do more here. It does offer quite a few calculators in other areas of its site, such as banking and mortgages, but more planning tools could be useful for its managed portfolios since what is already here is good.