Wealthfront Launches Automated Bond Ladder To Help Investors Maximize Returns On US Treasuries

BY Benzinga | TREASURY | 05/08/24 09:50 AM EDT

Wealthfront, a leader in the consumer fintech arena and a pioneer in the robo-advisor space, announced the launch of a new Automated Bond Ladder.

This innovative tool is designed to help investors maximize returns on U.S. Treasuries, offering a fluid, low-risk investment option that provides greater tax efficiency than traditional savings accounts or certificates of deposit.

Investors utilizing this new service can retain up to 13.3% more of their earned interest compared to using high-yield savings accounts or CDs, thanks to the tax exemption from state and local income taxes on U.S. Treasuries. This tax efficiency, combined with the product’s emphasis on principal preservation, positions the Automated Bond Ladder as a prime option for diversifying investment portfolios, safeguarding sudden financial gains, or saving for substantial expenses with minimal risk.

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Wealthfront has made the bond ladder strategy more accessible by lowering the entry point to just $500. This allows more investors to take advantage of the approach. The company’s advanced software automatically assesses rates across a range of state income-tax exempt U.S. Treasury bills and notes to construct a tailored ladder that spans six months to six years.

The automation simplifies the process of managing varying maturity dates. It also facilitates incremental investments as low as $100, and ensures the reinvestment of returns and maturing bonds.

“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,” said Dave Myszewski, vice president of Product at Wealthfront.

The excitement around U.S. Treasuries has been marked by record-high purchases in recent years. In 2023 alone, Treasury Bill acquisitions reached $175 billion. That’s a historical high; 2024 continues this trend with $47 billion in purchases in the first quarter.

The Automated Bond Ladder meets this rising demand by offering a modern, simplified tool for those looking to lock in favorable rates.

For more details on Wealthfront’s Automated Bond Ladder and to explore its suite of innovative financial products, click here.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.