Swell Investing Review 2023
A Robo Advisor With Socially Responsible Portfolios
But don't worry. Here are our favorite Swell Investing alternatives:
Do you want to do good for the world at large while at the same time doing good for your own investment portfolio? A lot of investors today — especially those of the Millennial generation — would agree. That's made socially responsible investing a hot trend. And robo advisor platform Swell Investing was created to help.
Swell Investing is a robo advisor that focuses on companies that engage in socially responsible industries. We're talking renewable energy, healthy living, and clean water.
Swell isn't the only socially responsible robo advisor on the market today. Here at Investor Junkie, we've also reviewed Aspiration, which offers robo investing along with banking services, as well as many other robo advisors that offer this theme as part of their overall models.
So let's see what makes Swell unique… and decide how it stacks up.
What Is Swell Investing?
Los Angeles-based Swell Investing (or just Swell) was founded in 2015 and launched in September 2016. The company aims to democratize the Sustainable, Responsible and Impact Investing (SRI) investment sector, which has traditionally been limited to large investors or dedicated exchange-traded funds (ETFs). The platform offers investors an opportunity to participate in SRI with as little as $50.
Swell is a true startup, but it’s backed by its parent company, Pacific Life, which provided the seed investment in all of Swell’s portfolios.
Each of Swell’s portfolios represents a different aspect of SRI, giving the investor an opportunity not only to participate in socially responsible investing, but also to isolate specific areas of interest. And it allows investors to choose both the portfolios they want to invest in and the desired allocation for each.
Swell Investing Features
|Tax Loss Harvesting|
|Customer Service||Phone: M-F 9-5 PT; Email|
- Rollover Assistance — Swell offers assistance with rolling over your 401(k) retirement savings into an IRA.
- Intelligent Tax Lot Ordering — While Swell doesn't offer tax-loss harvesting like many other robo advisors, it does use a system called Intelligent Tax Lot Ordering with every trade to help keep its clients' investing activity as tax efficient as possible. In a nutshell, Swell sells the shares its customers paid the most for while keeping those shares with the lowest purchase prices.
How Does Swell Investing Work?
Swell acts as your investment advisor, but your account is actually held with Folio Investments, Inc., an SEC-registered broker-dealer and a member of both FINRA and the SIPC.
Like many other robo advisors, Swell allows its users to select from pre-designed portfolios that are managed by the platform itself. But unlike traditional robo investing platforms, Swell does not have you complete a questionnaire that determines your portfolio composition. Instead, it gives you the option to choose which portfolios you want to invest in, as well as the allocation for each.
There’s another way that Swell departs from other robo advisors. While it’s typical for robo advisors to construct portfolios using primarily or exclusively exchange-traded funds (ETFs), Swell invests instead in individual stocks or, in the case of foreign stocks, American Depositary Receipts (ADRs). Each portfolio is comprised of between 37 and 68 individual securities.
Beyond the fact that you can choose which portfolios you will invest in, you also have at least limited ability to choose the stocks held in a particular portfolio. For example, if there are certain stocks that you would like to exclude from a portfolio, you can remove up to three holdings from it. You can make the changes anytime you choose.
There’s one other significant difference: When you invest through Swell, you’re a direct shareholder in each company that you own in a portfolio. This means that investors are able to vote on shareholder resolutions and even attend corporate meetings.
Swell Investing's Signup process
In order to sign up with Swell, you must be a U.S. citizen or resident alien and at least 18 years of age. You will need to provide the following information:
- Your name
- Your address
- Your Social Security number
- Your date of birth
- Your citizenship/residency status
- Your email address
- Your employment status
Swell will also ask about your current investment assets, your investment time horizon and your risk tolerance. This is done to establish your suitability for investing in Swell, as well as to meet certain SEC reporting requirements.
For funding purposes, Swell supports automatic bank linking with more than 1,500 banks. But if your bank is not on the list, it can be added with the use of test deposits. Only savings and checking accounts — not money market funds — can be linked. Generally, it takes four to eight days for your account to be activated and fully invested.
|Minimum to Open Account||$100,000||$10||$50|
|Advice Options||Automated, Human Assisted||Automated, Human Assisted||Automated|
|Socially Responsible Investing|
Swell Investing's Model Portfolio
Once again, Swell acts as your investment advisor, managing your money, which is held in a brokerage account in your name at Folio Investments, Inc. Swell’s portfolios are managed by its portfolio managers.
The platform uses a “rules-based” investment approach. Each portfolio is constructed with two important factors — impact and performance — and follows these steps:
- Swell starts by screening each company for a commitment to positive impact across multiple areas of its business (environment, social impact, governance).
- Swell researches each company to determine how it derives revenue, making sure it actively delivers impact to the world.
- Swell analyzes each company’s financial health and stock valuation.
Swell is currently offering seven portfolios that represent a unique segment of socially responsible investing and are comprised entirely of stocks and ADRs:
- Green Tech — Focused on energy efficiency, building desirable products and making a concerted effort to reduce the pull on the energy infrastructure. This portfolio is composed of 53 companies, including BorgWarner (BWA), Johnson Controls (JCI), and Tesla Motors (TSLA).
- Renewable Energy — Focused on companies that are harnessing natural resources (alternative energy sources) to power the world. In this portfolio, there are 64 companies, including Analog Devices (ADI), TransDigm Group (TDG) and Eaton Corp. (ETN).
- Zero Waste — Focused on companies that provide solutions for composting, recycling and creating new materials from recycled materials. This portfolio is made up of 37 companies, including Steel Dynamics, Inc. (STLD), FLIR Systems, Inc. (FLIR) and Parker-Hannifin Corp. (PH).
- Clean Water — Focused on companies engaged in conserving water, cleaning it up and streamlining systems. This portfolio contains 44 companies, including Albemarle Corp. (ALB), Parker-Hannifin Corp. (PH) and Martin Marietta Materials, Inc. (MLM).
- Healthy Living — Focused on companies engaged in food, fitness and new technologies that enable people to live longer, healthier lives. In this portfolio, there are 54 companies, including Align Technology, Inc. (ALGN), Garmin Ltd. (GRMN) and VF Corp. (VFC).
- Disease Eradication — Focused on pharmaceutical and biotech companies conducting R&D and developing novel approaches to combatting today's biggest health challenges. This portfolio holds 68 companies, including Abbott Labs (ABT), Becton Dickinson & Co. (BDX), and AbbVie, Inc. (ABBV).
- Impact 400 — Comprised of nearly 400 securities spread across sectors. Currently, the largest sector representations in this portfolio are health care, information technology and industrials.
If that still seems a bit complicated, Swell now makes it even easier by introducing predetermined portfolio mixes. Choose a mix, and Swell will create an allocation tailored for your specific concerns. Mix themes include:
- The Tech Optimist — Heavily weighted in green technology companies
- The Environmentalist — Emphasizing environmental initiatives
- The Generalist — Giving you exposure to all sectors and impact areas
You can also create your own portfolio mix, of course.
Swell keeps 0.25% of your portfolio in cash, strictly for the purpose of paying the advisory fees. The company does this in order to avoid selling stock each month to cover the cost of the fee. All cash held in your portfolio is in an interest-bearing account, which is also FDIC insured.
Currently, Swell is offering a great promotion for Investor Junkie readers who are interested in using the platform for socially responsible investing.
Open an account with an investment of at least $50, and Swell will give you another $50 as a signup bonus. Just make sure you use the promo code JUNKIE50 when you sign up for an account.
Swell is in something of a unique corner of the robo advisor space, in offering strictly socially responsible investing.
If you're interested in SRI, here's a list of robo advisors we've reviewed that offer this theme:
Swell has the advantage of investing in individual stocks, giving the investor an opportunity to see exactly what companies make up each portfolio, as well as the individual allocation in each stock. It enhances the transparency of Swell’s portfolios. In addition, an investor has at least limited ability to make changes within the composition of each portfolio, which is a major benefit of individual stock investment.
Swell is perhaps best used as the socially responsible allocation of a well-balanced portfolio. Unlike other robo advisors, Swell doesn’t create a diversified portfolio that invests in different market sectors or different asset classes, like bonds and real estate. It’s strictly socially responsible investing.