I am a Premium client, why am I getting a Red X for Diversification?

I'm a Premium client, why am I still getting a “Red X” for the Diversification best practice, and why don’t my asset class percentages exactly match up with the recommended percentage?

This occasionally happens to some Premium users, mainly due to the size of a portfolio. With smaller portfolios, such as those less than $20,000, it may not be efficient to purchase ETFs from all asset classes, especially those that only have a small percent representation in the overall portfolio. As an example, a $10,000 account may ideally have 3% in Foreign Bonds and 6% in TIPS. That would only be $300 or $600 respectively, and it’s not efficient to purchase that asset class until the portfolio grows larger.

A “Red X” can also appear if there is even a slight deviation from your recommended percentage. Meaning, you have 15% of your portfolio in Emerging Markets, but ideally you should have 17%. In this case, the algorithm weighs the benefits of rebalancing and may deem it not feasible to rebalance due to fund fees, short term trading restrictions in other positions, or capital gains. But because you are not at your “ideal” asset allocation, the system shows you a “Red X.”

Not to worry though, your portfolio is very well-diversified and in an optimal state given your current situation. Rest assured, the difference of your portfolio between the red X and green check in this case is minimal.

As your portfolios grows and you make additional contributions, the algorithm will "fill in" the additional asset classes to round out your holdings.