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Wealthfront's New Tool Targets 13.3% Higher Treasury Returns

Wealthfront's Automated Bond Ladder enhances U.S. Treasury returns, offering tax efficiency and access from $500.

By Max Weldon

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5/8, 10:04 EDT
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Key Takeaway

  • Wealthfront's new Automated Bond Ladder aims to maximize U.S. Treasury returns, offering up to 13.3% more interest retention than high-yield savings or CDs.
  • The service lowers the entry point to $500, making tax-efficient bond ladders accessible to more investors and simplifying investment in U.S. Treasuries.
  • With record-high Treasury Bill purchases in 2023 ($175 billion) and continuing into 2024 ($47 billion Q1), Wealthfront meets demand for modernized, efficient bond investing.

Wealthfront Innovates with Automated Bond Ladder

Wealthfront, a frontrunner in the consumer fintech space, has unveiled its Automated Bond Ladder, a cutting-edge tool aimed at optimizing returns on U.S. Treasuries. This launch marks a significant step towards modernizing bond investment, offering a seamless, low-risk option that surpasses traditional savings accounts and CDs in tax efficiency. By leveraging this tool, investors can retain up to 13.3% more of their earned interest, exempt from state and local income taxes, thereby enhancing the appeal of U.S. Treasuries for portfolio diversification, risk mitigation, and saving for major expenses.

Tax Efficiency and Principal Preservation

The Automated Bond Ladder by Wealthfront stands out for its emphasis on tax efficiency and principal preservation, key factors that make U.S. Treasuries an attractive investment. The service's design allows for a tailored bond ladder strategy, spanning six months to six years, with an entry point as low as $500. This democratizes access to a strategy typically reserved for higher-net-worth individuals. Wealthfront's advanced software plays a pivotal role in this innovation, automatically selecting the best rates across various U.S. Treasury bills and notes, exempt from state income tax, thus maximizing investor returns.

Record-High Treasury Purchases

The context of this launch is set against a backdrop of surging interest in U.S. Treasuries, with record-high purchases noted in recent years. In 2023, Treasury Bill acquisitions soared to $175 billion, a historical peak, with the trend continuing into 2024 as the first quarter saw purchases of $47 billion. Wealthfront's Automated Bond Ladder addresses this growing demand by offering a streamlined, efficient tool for investors seeking to capitalize on favorable rates amidst the highest yields seen in 15 years.

Management Quotes

  • Dave Myszewski, Vice President of Product at Wealthfront:

    "Bonds are begging for modernization with the help of software. Today’s launch of the Automated Bond Ladder continues to redefine what is possible when it comes to saving and growing your money by bringing the same automated, set-it-and-forget-it approach to U.S. Treasuries that we brought to ETFs when we pioneered the robo-advisor industry."