Depending on your choices, Marcus Invest adopts one of three strategies to invest your money. How much of your balance is invested in each fund in your portfolio depends on your risk tolerance and time horizon.
Basic strategy of Marcus Invest
Core puts you in a low-fee, diversified ETF portfolio that works the same way as most standard robo-advisor portfolios. It includes about 12 funds, including a small cash allowance. This number of funds is comparable to many robo-advisors, but you can achieve similar diversification with far fewer fund choices. It’s one of the reasons why Vanguard’s offerings ranked so highly in Forbes Advisor’s ranking of top robo-advisors.
Notably, Marcus Invest’s Core portfolio includes allocations to value and small-cap equity funds, which have historically outperformed other types of funds over the long term.
Marcus Invest Impact Strategy
Impact invests in funds that score well on environmental, social and governance (ESG) metrics from third-party assessors, meaning they choose companies that have a positive impact on society and the environment and are governed in a socially responsible way. You will also avoid sectors like coal, tobacco and firearms.
Because ESG funds require more research and management than standard funds, they tend to charge higher expense ratios. Many investors are willing to pay a little more in pursuit of social good, but the ESG approach to investing has also been criticized. Some of them ask whether the companies included in ESG funds are really as progressive as they seem – Facebook, for example – which means you could pay a premium to invest in companies that do not fully correspond to your values.
Marcus Invest Smart Beta Strategy
The smart beta strategy uses a proprietary methodology that scores companies on fundamental and technical performance metrics and aims to outperform the market. This type of investment style is more risky and appeals to more aggressive investors.
A Marcus Invest smart beta portfolio would include active ETFs, as well as more standard passive funds. Some of these may include Goldman Sachs ETFs – Marcus Invest gives you account credit for expense ratios incurred when choosing Goldman Sachs funds for your portfolio.
Note that Smart Beta is not available for retirement accounts.
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