Dividends are automatically reinvested as long as greater than a dollar. They're selling investors on low costs and tax efficiency, while comparing the savings against the colossal costs of traditional funds. They fail to compare the low expenses of index funds. Looking beyond the hype, Folios can actually be quite expensive for the average small investor. Folios may look like a bargain for investors accustomed to the price gauging of active funds.
Folios claim they offer greater tax efficiency than mutual funds.
For example, with a Folio you can choose to sell the losing stocks and realize a capital loss that can be offset with a gain. There are lots of tax managed index funds out there to help investors minimize taxes. If you're a buy and hold investor, you're better off making all your one time purchases at a discount brokerage. Folios may be suitable if you're a wealthy, experienced investor that likes to actively trade stocks. But, for the average Joe just starting out, Folios are not a great alternative.