The best Betterment portfolio strategy depends on your financial goals, risk tolerance, and time horizon. The Core portfolio suits most investors seeking long-term growth with global diversification. Investment Advisers Act of 1940 Section 206 requires Betterment, as a registered investment adviser with the SEC, to act in your best interest when recommending portfolio strategies. Failing to choose the right portfolio could mean missing tax-saving opportunities, taking on too much risk, or underperforming the market for years.
Betterment now serves over 1 million customers with $65+ billion in assets under management. The platform offers nine distinct portfolio strategies, each designed for different investor needs.
What you will learn in this article:
- 🎯 How each Betterment portfolio strategy works and who benefits most from it
- 💰 The exact fees, tax implications, and hidden costs of each portfolio option
- ⚖️ Which portfolio matches your risk tolerance and retirement timeline
- 🚫 Critical mistakes that cost investors thousands—and how to avoid them
- 📊 Real-world scenarios showing the financial consequences of each portfolio choice
Why Your Portfolio Choice Directly Impacts Your Retirement Date
Your Betterment portfolio selection determines your stock-to-bond ratio, which controls how much risk you take and how fast your money grows. A 90% stock portfolio can swing 20% or more in a single year. A 30% stock portfolio may barely keep pace with inflation.
Betterment’s internal research shows that 69% of customers using tax-loss harvesting saw potential savings exceeding their annual fees. The wrong portfolio strategy eliminates these savings. Choosing a portfolio that triggers unnecessary short-term capital gains creates an immediate tax bill at rates ranging from 10% to 37% in 2025.
The consequences extend beyond taxes. Over 30 years, the Betterment 90% stock portfolio achieved an 8.51% compound annual return. A poorly matched portfolio could leave you working an extra 5-10 years before retirement.
Breaking Down Every Betterment Portfolio Strategy
Betterment offers multiple portfolio strategies with different goals, fee structures, and risk levels. Each strategy uses exchange-traded funds (ETFs) to gain exposure to various asset classes. Understanding the differences helps you pick the one aligned with your financial situation.
The Betterment Core Portfolio: The Foundation for Most Investors
The Core portfolio invests in a globally diversified mix of stocks and bonds using low-cost ETFs. Betterment’s algorithm allocates your money across U.S. stocks, international developed market stocks, emerging market stocks, U.S. bonds, and international bonds. This portfolio has 101 different allocation options ranging from 0% stocks to 100% stocks.
Betterment recommends a specific allocation based on your goal and time horizon. Investors with 20+ years until their goal receive the most aggressive recommendation: 90% stocks and 10% bonds. The expense ratios for Core portfolio ETFs range from 0.04% to 0.11%, making it one of the cheapest options available.
| Portfolio Feature | Core Portfolio Details |
|---|---|
| Stock/Bond Options | 101 allocations (0-100% stocks) |
| ETF Expense Ratios | 0.04% – 0.11% |
| Recommended For | Long-term retirement, general investing |
| Tax-Loss Harvesting | Yes, fully compatible |
| Auto-Adjust Feature | Yes, available |
The Core portfolio removed its explicit value tilt in January 2024, shifting to broader market exposure. Investors who preferred the old allocation can now select the separate Value Tilt portfolio instead.
Goldman Sachs Smart Beta Portfolio: Higher Risk for Higher Potential Returns
The Goldman Sachs Smart Beta portfolio replaces traditional market-cap-weighted index funds with factor-based ETFs. These funds invest more heavily in companies that exhibit specific characteristics shown by research to potentially outperform over long periods. The four factors include companies that are cheap relative to their accounting value, sustainably profitable, lower in volatility, and trending strongly upward in price.
This strategy carries higher systematic risk than the Core portfolio. The Smart Beta ETFs may concentrate investments in certain industries. This reduces diversification compared to the Core portfolio’s broad-market funds.
Betterment recommends this portfolio only for investors with high risk tolerance and long investment horizons. The ETF costs are higher than Core portfolio ETFs but lower than the industry average for smart beta strategies. Investors should expect periods of underperformance compared to the standard market-cap approach, even over multiple years.
| Smart Beta Feature | Details |
|---|---|
| Factor Focus | Value, Quality, Low Volatility, Momentum |
| Risk Level | Higher than Core |
| Cost | Higher than Core, lower than industry average |
| Best For | High risk tolerance, 10+ year horizon |
Socially Responsible Investing (SRI) Portfolios: Aligning Money with Values
Betterment offers three distinct SRI portfolios for investors who want their money to reflect their values. Each portfolio takes a different approach to environmental, social, and governance (ESG) investing.
Broad Impact Portfolio: This option considers all three ESG dimensions equally without diluting any single factor. The portfolio invests in companies that score well across environmental practices, social responsibility, and corporate governance. It also includes funds that use shareholder advocacy to push for ESG changes at companies.
Climate Impact Portfolio: This strategy sharpens focus on environmental objectives. The portfolio seeks exposure to companies working on carbon footprint reduction, fossil fuel divestment, and green financing. Investors prioritizing climate change mitigation benefit most from this option.
Social Impact Portfolio: This portfolio emphasizes social empowerment through investments in gender equity and social equity-focused funds. The strategy maintains diversification while increasing exposure to companies promoting social change.
| SRI Portfolio | Primary Focus | Best For |
|---|---|---|
| Broad Impact | All ESG factors equally | Values-driven investors seeking balance |
| Climate Impact | Environmental objectives | Climate-focused investors |
| Social Impact | Social equity and gender diversity | Social justice-focused investors |
All three SRI portfolios include partial allocations to engagement-based socially responsible ETFs. These funds use shareholder proposals and proxy voting to influence corporate behavior. Betterment continues to allocate some funds to non-ESG investments in bond asset classes where satisfactory ESG solutions are not yet available.
Innovative Technology Portfolio: Betting on Future Industries
The Innovative Technology portfolio targets companies positioned to transform the future economy. The strategy uses artificial intelligence and fundamental analysis to identify leaders in AI, digital transformation, clean energy, and medical innovation. This portfolio offers increased exposure to potentially high-growth companies while maintaining some diversification.
Betterment’s 2026 portfolio updates include adjustments to the Innovative Technology strategy. The company is adding an actively managed core bond fund and fine-tuning U.S. stock exposure. High-growth innovation stock exposure decreases as your bond allocation increases.
The Innovative Technology portfolio carries higher risk than the Core portfolio due to concentration in specific sectors. Adverse developments in technology industries could cause significant losses. This portfolio suits investors who believe technology companies will continue leading market growth over the next decade or longer.
Value Tilt Portfolio: The Return to Traditional Value Investing
The Value Tilt portfolio maintains global diversification while adding targeted exposure to U.S. value companies. Value companies are businesses that appear undervalued based on metrics like price-to-earnings ratios. The portfolio includes allocations to large-cap, mid-cap, and small-cap U.S. value funds.
When Betterment removed the value tilt from its Core portfolio, it created this separate option for investors who still believe in value investing research. The academic foundation supporting value investing spans decades. Value stocks have historically outperformed growth stocks over very long periods, though recent years have shown the opposite pattern.
The Value Tilt portfolio is compatible with tax-loss harvesting, auto-adjust, and tax coordination features. Investors selecting this strategy should expect the portfolio to underperform during growth-stock rallies while potentially outperforming during periods favoring value.
BlackRock Target Income Portfolio: Bonds-Only for Retirees
The BlackRock Target Income portfolio contains 100% bonds for investors seeking to limit market volatility and generate income. BlackRock, one of the world’s largest asset managers, actively manages this strategy. Four versions target different yield levels: Conservative Income, Moderate Income, Balanced Income, and Aggressive Income.
| Income Portfolio Version | Target Yield (as of Feb 2026) |
|---|---|
| Conservative Income | 4.04% |
| Moderate Income | – |
| Balanced Income | – |
| Aggressive Income | 5.15% |
Higher-yield versions carry more risk. The Aggressive Income portfolio invests in bonds with greater credit risk to achieve its higher yield target. Retirees seeking stable income should match their risk tolerance to the appropriate version. All dividends are automatically reinvested.
Flexible Portfolio: Custom Control for Experienced Investors
The Flexible portfolio allows investors to set their own weights for each asset class. Unlike the pre-built portfolios, Flexible gives access to additional asset classes including commodities, REITs, and high-yield corporate bonds. Betterment provides guidance by rating the diversification and relative risk of your custom allocation.
This option suits experienced investors who have specific views about market sectors. You maintain access to Betterment’s automated strategies including rebalancing, tax-loss harvesting, and tax coordination. Betterment shows you projections comparing your custom allocation against average market outcomes before you finalize changes.
Switching from Core to Flexible portfolio can trigger capital gains taxes on existing holdings. One investor reported facing $10,000 in capital gains taxes when attempting to switch a $118,000 account. Use Betterment’s Tax Impact Preview tool before making changes.
Crypto ETF Portfolio: Limited Digital Asset Exposure
The Crypto ETF portfolio invests in spot Bitcoin ETFs and spot Ethereum ETFs, weighted by their market capitalization. The portfolio includes a small allocation to U.S. Treasury ETFs for some stability. Betterment charges a 1% annual management fee for crypto portfolios, significantly higher than the standard 0.25%.
| Crypto ETF Feature | Details |
|---|---|
| Assets | Bitcoin ETFs, Ethereum ETFs, U.S. Treasury ETFs |
| Management Fee | 1% annually |
| Tax-Loss Harvesting | NOT available |
| Auto-Adjust | NOT available |
| Account Types | Taxable accounts only |
Critical limitations apply to this portfolio. Tax-loss harvesting does not work with the Crypto ETF portfolio. Betterment’s auto-adjust feature is unavailable. The portfolio is only available for taxable accounts—not IRAs or 401(k)s. Rebalancing may trigger short-term capital gains that the algorithm prioritizes over tax efficiency.
Cryptocurrencies represent speculative investments with extreme volatility. Bitcoin and Ethereum have experienced rapid price increases followed by similarly rapid decreases. Betterment’s 2026 portfolio updates reduced ETF costs by 0.10% for this portfolio.
How Betterment’s Fee Structure Affects Your Portfolio Returns
Betterment uses a tiered pricing structure based on account balance and plan type. Understanding these fees helps you calculate the true cost of each portfolio strategy.
Digital Plan Fees:
- If your household balance is below $24,000 and you don’t have at least $200/month in recurring deposits: $5 per month
- If your household balance is $24,000 or above, or you have $200/month in recurring deposits: 0.25% annually
Premium Plan Fees:
- 0.65% annual management fee for balances under $1 million
- Progressive discounts for balances above $1 million
- Minimum balance requirement: $100,000
| Balance Tier | Digital Plan Fee | Premium Plan Fee |
|---|---|---|
| Under $24,000 (no recurring deposit) | $5/month | N/A |
| $24,000+ or $200/mo deposit | 0.25% annually | 0.65% annually |
| $1 million – $2 million | 0.15% annually | 0.55% annually |
| $2 million+ | 0.10% annually | 0.10% annually |
ETF expense ratios add to your total cost. Most Betterment ETFs have expense ratios ranging from 0.05% to 0.21%. The Goldman Sachs Smart Beta portfolio carries slightly higher fund costs. The Crypto ETF portfolio adds a full 1% management fee on top of ETF expenses.
The $5 monthly fee for small accounts translates to a higher effective percentage on small balances. A $1,000 balance paying $60 annually in $5 monthly fees equals a 6% effective fee rate. This makes Betterment less competitive for very small accounts compared to zero-fee alternatives.
Three Investor Scenarios: Which Portfolio Fits Each Situation?
Scenario 1: Sarah, Age 28, Starting Retirement Savings
Sarah just started her first job with a $50,000 salary. She can contribute $500 monthly to a Roth IRA and wants to maximize long-term growth. Her retirement is 37 years away.
| Action | Consequence |
|---|---|
| Selects Core Portfolio at 90% stocks | Maximum growth potential over 37 years |
| Enables auto-adjust feature | Portfolio automatically becomes conservative as retirement approaches |
| Activates tax-loss harvesting | Annual tax savings potentially exceed Betterment’s fees |
| Maintains 90/10 allocation | Experiences high volatility but has decades to recover |
Best Portfolio for Sarah: Core Portfolio at 90% stocks with auto-adjust enabled. The glidepath starts at 90% stocks for goals 20+ years away and gradually becomes more conservative.
Scenario 2: Michael, Age 52, Maximizing Retirement Contributions
Michael earns $180,000 annually and has $400,000 in a traditional IRA and $150,000 in a taxable account. He plans to retire at 65 and wants to optimize for taxes.
| Action | Consequence |
|---|---|
| Enables Tax-Coordinated Portfolio | Places less tax-efficient assets in tax-advantaged accounts |
| Selects Core Portfolio at 70% stocks | Balanced growth with moderate volatility |
| Links taxable and IRA accounts | Betterment manages both as single coordinated portfolio |
| Avoids frequent strategy changes | Prevents triggering unnecessary capital gains |
Best Portfolio for Michael: Core Portfolio at 70% stocks with Tax-Coordinated Portfolio enabled. The TCP feature is expected to yield higher after-tax returns than uncoordinated accounts over long periods.
Scenario 3: Patricia, Age 68, Generating Retirement Income
Patricia retired with $800,000 in her accounts. She needs monthly income while preserving capital. Her primary concern is avoiding large losses.
| Action | Consequence |
|---|---|
| Selects BlackRock Target Income | 100% bond allocation limits volatility |
| Chooses Moderate Income version | Balance between yield and stability |
| Keeps taxable account separate | Generates income without touching retirement funds first |
| Reviews quarterly | Adjusts income needs based on actual expenses |
Best Portfolio for Patricia: BlackRock Target Income Portfolio (Moderate Income version) for predictable yields. The actively managed strategy provides professional bond selection without stock market exposure.
Tax-Loss Harvesting: The Hidden Value in Your Portfolio Choice
Betterment’s tax-loss harvesting feature sells investments at a loss and immediately buys similar (but not identical) securities. This captures the tax benefit of the loss while maintaining your market exposure. The IRS wash sale rule prohibits claiming a loss if you buy substantially identical securities within 30 days before or after the sale.
Betterment uses a three-ticker system for each asset class. When harvesting a loss in one ETF, the algorithm purchases a secondary ETF. If another harvest opportunity arises, it moves to a tertiary ETF. This approach avoids wash sales while capturing multiple harvesting opportunities.
| Tax-Loss Harvesting Benefit | How It Works |
|---|---|
| Offset short-term capital gains | Harvested losses reduce gains taxed at ordinary income rates (up to 37%) |
| Offset long-term capital gains | Remaining losses reduce gains taxed at 0%, 15%, or 20% |
| Offset ordinary income | Up to $3,000 annually can offset wages and other income |
| Carry forward unused losses | Excess losses carry forward to future tax years indefinitely |
The order of offsets follows IRS rules: short-term losses offset short-term gains first, then long-term gains, then ordinary income. Long-term losses follow the same hierarchy.
Critical limitation: Tax-loss harvesting does not work with the Crypto ETF portfolio. The Crypto ETF portfolio disclosure explicitly states this feature is unavailable. Investors in multiple Betterment portfolios may see reduced harvesting opportunities due to wash sale considerations across goals.
The Auto-Adjust Feature: How Your Portfolio Changes Over Time
Betterment’s auto-adjust feature systematically shifts your portfolio to a more conservative allocation as your target date approaches. This works similarly to target-date funds (TDFs) offered in 401(k) plans. The algorithm gradually reduces stock exposure and increases bond exposure.
The feature enables automatically when you select Betterment’s recommended allocation. If you choose a custom allocation, auto-adjust is disabled. You can turn off auto-adjust manually through your account settings.
| Goal Type | Starting Allocation | Ending Allocation |
|---|---|---|
| General Investing (20+ years) | 90% stocks | 56% stocks |
| Retirement | 90% stocks | 56% stocks |
| Retirement Income | 56% stocks | 30% stocks |
| Major Purchase | Varies by time horizon | More conservative at target date |
Auto-adjust is not available for:
- Crypto ETF portfolio
- Emergency Fund goals (no defined time horizon)
- Cash goals
- Self-directed investing accounts
One Reddit user noted that setting allocation to 99% stocks instead of 100% keeps the auto-adjust glidepath available. At 100% stocks, the feature turns off because you have overridden the recommended allocation.
Tax-Coordinated Portfolio: Maximizing After-Tax Returns
The Tax-Coordinated Portfolio (TCP) feature manages multiple accounts as a single portfolio while optimizing where each asset is held. Different account types receive different tax treatment:
- Taxable accounts: Capital gains taxed when realized; qualified dividends taxed at preferential rates
- Tax-deferred accounts (Traditional IRA/401k): All distributions taxed as ordinary income
- Tax-exempt accounts (Roth IRA/401k): Qualified distributions are tax-free
Betterment’s algorithm places less tax-efficient assets in tax-advantaged accounts. High-dividend international stocks, for example, might go into your Roth IRA while tax-efficient U.S. index funds stay in your taxable account.
| Asset Type | Optimal Location | Reason |
|---|---|---|
| High-dividend stocks | Tax-deferred or tax-exempt | Dividends taxed at ordinary rates in taxable accounts |
| International stocks | Taxable (sometimes) | Foreign tax credit available in taxable accounts |
| Municipal bonds | Taxable | Already tax-exempt, no benefit from tax-advantaged accounts |
| Growth stocks | Taxable | Lower dividends, long-term capital gains treatment |
Requirements for Tax Coordination:
- Balances in at least two different account types
- Compatible portfolio strategy (Core, SRI, Value Tilt, or Innovation Technology)
- All accounts coordinated must share the same strategy
TCP may not suit all investors. Betterment’s disclosure warns that the strategy can backfire if: (1) you are in a low tax bracket now and expect to remain low in retirement, (2) your accounts have significantly different time horizons, or (3) you have large upcoming transfers or withdrawals.
Mistakes to Avoid When Choosing Your Betterment Portfolio
Mistake 1: Switching Portfolios Too Often
Changing your portfolio strategy triggers sales of existing holdings. In taxable accounts, these sales generate capital gains taxes. Short-term gains (assets held less than one year) are taxed at ordinary income rates up to 37%. Frequent switching eliminates the long-term compounding benefits of staying invested.
Mistake 2: Ignoring Wash Sale Rules Across Accounts
The wash sale rule applies across all your accounts, not just your Betterment accounts. If you sell a losing position in your taxable Betterment account and buy the same ETF in your Fidelity IRA within 30 days, the loss is disallowed. Betterment’s algorithm protects against wash sales within its platform but cannot track your external accounts.
Mistake 3: Selecting Crypto ETF Portfolio for Tax-Loss Harvesting
Investors expecting tax-loss harvesting benefits from the Crypto ETF portfolio face disappointment. The feature explicitly does not work with this portfolio. Selecting Crypto ETF for one goal can also reduce harvesting opportunities in your other Betterment goals.
Mistake 4: Overriding Auto-Adjust Near Retirement
Setting a 100% stock allocation when you are five years from retirement disables the glidepath protection. If markets crash immediately before retirement, you have no bond cushion. The auto-adjust feature exists specifically to reduce this sequence-of-returns risk.
Mistake 5: Not Linking Accounts for Tax Coordination
Investors with both taxable and tax-advantaged accounts who manage them separately miss significant tax benefits. Betterment’s research shows TCP can improve after-tax returns by approximately 0.48% annually—nearly double the basic advisory fee.
| Mistake | Negative Outcome |
|---|---|
| Frequent portfolio switching | Capital gains taxes erode returns |
| Ignoring wash sales across accounts | Tax losses permanently disallowed |
| Expecting TLH from Crypto ETF | Zero tax benefits, higher fees |
| Overriding auto-adjust near retirement | Maximum exposure during most vulnerable period |
| Not using Tax Coordination | Missing approximately 0.48% annual after-tax gains |
Pros and Cons of Each Betterment Portfolio Strategy
| Portfolio | Pros | Cons |
|---|---|---|
| Core | Lowest ETF costs; maximum diversification; all features available | No factor tilts; underperforms S&P 500 in U.S.-dominated markets |
| Goldman Sachs Smart Beta | Potential for higher returns; research-backed factors | Higher fees; periods of underperformance; less diversified |
| Broad Impact SRI | Aligns with ESG values; shareholder advocacy exposure | Slightly higher costs; some non-ESG bonds still included |
| Climate Impact SRI | Focused environmental approach; fossil fuel divestment | Concentrated sector exposure; may lag during energy rallies |
| Social Impact SRI | Gender and social equity focus; values alignment | Limited fund options; newer strategy |
| Innovative Technology | Exposure to high-growth sectors; AI-driven selection | Sector concentration risk; higher volatility |
| Value Tilt | Academic research support; potential mean reversion | Prolonged underperformance possible; value trap risk |
| BlackRock Target Income | Professional active management; stable income | Zero growth potential; interest rate sensitivity |
| Flexible | Maximum customization; additional asset classes | Requires investment knowledge; potential tax consequences |
| Crypto ETF | Easy crypto exposure via ETFs; automated rebalancing | 1% fee; no TLH; no auto-adjust; taxable accounts only |
SEC Regulations Protecting Betterment Investors
Betterment is registered with the SEC as an investment adviser and with FINRA as a broker-dealer. These registrations subject Betterment to the fiduciary requirements of the Investment Advisers Act of 1940. The company must provide advice consistent with its fiduciary duty to clients.
The SEC’s 2019 interpretation of fiduciary duty clarifies that robo-advisers like Betterment must provide advice and monitoring in the client’s best interest. This includes obtaining sufficient client information to make suitable recommendations and adopting compliance programs designed to prevent violations.
In April 2023, the SEC charged Betterment for misstatements related to its tax-loss harvesting feature between 2016 and 2019. The issues involved coding errors that prevented some clients from receiving expected tax benefits. Betterment settled the charges and implemented corrective measures. The case highlights that even automated systems require robust compliance oversight.
Your protections as a Betterment investor:
- Fiduciary duty: Betterment must act in your best interest
- SIPC coverage: Securities protected up to $500,000 (including $250,000 cash limit)
- FDIC insurance on cash: Up to $2 million through program banks
- SEC oversight: Regular examinations and enforcement authority
- FINRA supervision: Broker-dealer activities monitored
Do’s and Don’ts for Betterment Portfolio Selection
DO: Match Your Time Horizon to Your Risk Level
Longer time horizons support higher stock allocations. The glidepath for retirement goals starts at 90% stocks for periods 20+ years away. Shorter goals need more conservative allocations because you have less time to recover from market downturns.
DON’T: Chase Recent Performance
One investor on Reddit complained that Betterment’s Core portfolio lagged the S&P 500 by nearly half over five years. The explanation: Betterment’s global diversification includes international stocks that underperformed U.S. stocks during that specific period. Past U.S. outperformance does not guarantee future outperformance.
DO: Enable Tax-Loss Harvesting in Taxable Accounts
The feature costs nothing extra and potentially covers your annual fees. Betterment’s data shows most customers using TLH saw tax savings exceeding their advisory fees. There is no downside for long-term investors.
DON’T: Use Multiple Portfolio Strategies Without Understanding Wash Sale Impacts
Having Core portfolio in one goal and Innovative Technology in another can create wash sale complications. Both portfolios may hold similar underlying securities. Betterment’s TLH disclosure warns that electing different strategies for multiple goals may reduce loss harvesting opportunities.
DO: Review Your Allocation Annually
Life circumstances change. A job loss might require a more conservative approach. An inheritance might allow more aggressive investing. Betterment’s platform makes reallocation easy, but understand the tax consequences before making changes.
DON’T: Select Crypto ETF as Your Primary Investment
The 1% fee, lack of tax-loss harvesting, and extreme volatility make Crypto ETF unsuitable as a core holding. If you want crypto exposure, limit it to a small percentage of your total portfolio.
Comparing Betterment to Major Competitors
| Feature | Betterment | Wealthfront |
|---|---|---|
| Management Fee | 0.25% (Digital) | 0.25% |
| Minimum Balance | $0 ($10 to start) | $500 |
| Human Advisor Access | Yes (Premium at 0.65%) | No |
| Tax-Loss Harvesting | ETF-level | Stock-level (direct indexing) |
| Direct Indexing | Coming in 2026 | Available |
| FDIC Insurance (Cash) | Up to $2 million | Up to $8 million |
| Portfolio Line of Credit | No | Yes |
| SRI Options | 3 portfolios | Yes |
Wealthfront’s stock-level tax-loss harvesting provides more granular control than Betterment’s ETF-level approach. Betterment announced plans to launch direct indexing in the first half of 2026. For investors wanting human advisor access, Betterment Premium remains the only option between these two robo-advisors.
Betterment offers broader FDIC insurance for cash accounts—up to $2 million compared to Wealthfront’s $8 million. However, Wealthfront provides a portfolio line of credit allowing you to borrow against your investments at low rates. Betterment does not offer this feature.
How Betterment’s 2026 Portfolio Updates Affect You
Betterment announced several changes taking effect in 2026 across multiple portfolio strategies:
Expanded Bond Market Access
Betterment is adding an actively managed core bond fund to non-SRI portfolios. Passive bond strategies tend to focus on U.S. Treasuries while overlooking other market segments. The new actively managed fund provides exposure to high-yield and securitized offerings that may offer greater return potential as interest rates decline.
Fine-Tuned U.S. Stock Exposure
Mid-cap stock exposure is decreasing while large-cap exposure increases. This change better aligns the portfolios with standard market benchmarks. The adjustment applies to Core, Innovative Technology, Value Tilt, and Flexible portfolios.
Lower Crypto ETF Costs
The weighted average expense ratio for Crypto ETF portfolio dropped by 0.10% due to fund swaps. Bitcoin allocation increased to match market capitalization weighting.
SRI Portfolio Bond Adjustments
All three SRI portfolios may see slight increases in short-term Treasury allocations. This helps smooth the glidepath for investors using auto-adjust as they approach retirement.
Betterment’s technology implements these changes automatically through tax-efficient transitions. Taxable accounts receive gradual changes designed to minimize capital gains. Tax-advantaged accounts transition without any tax impact.
FAQs
Can I switch Betterment portfolios without penalty?
No, there is no penalty from Betterment itself, but switching triggers sales that may create capital gains taxes in taxable accounts.
Does Betterment offer a 100% stock portfolio?
Yes, the Core portfolio offers allocations from 0% to 100% stocks. Selecting 100% disables the auto-adjust glidepath feature.
Is Betterment’s tax-loss harvesting worth it?
Yes, 69% of TLH users saw tax savings exceeding their annual Betterment fees according to company research.
Can I have multiple portfolios at Betterment?
Yes, you can select different portfolio strategies for different goals. Wash sale rules may reduce tax-loss harvesting effectiveness.
Does Betterment charge extra for SRI portfolios?
No, SRI portfolios carry the same 0.25% advisory fee. Underlying ETF expense ratios may be slightly higher.
Is the Goldman Sachs Smart Beta portfolio risky?
Yes, it carries higher systematic risk than the Core portfolio due to factor tilts and reduced diversification.
Can I use Crypto ETF portfolio in my IRA?
No, the Crypto ETF portfolio is only available for taxable accounts, not IRAs or 401(k)s.
Does Betterment have a minimum balance?
No, there is no minimum balance to open an account. A $10 minimum applies to start investing.
How much does Betterment Premium cost?
0.65% annually for balances under $1 million, with the requirement of at least $100,000 in eligible investments.
Can Betterment Premium members access financial advisors?
Yes, Premium members get unlimited access to CFP professionals for in-depth investment advice and planning.
Does Betterment automatically rebalance?
Yes, automated rebalancing keeps your portfolio aligned with target allocations without requiring manual intervention.
Is Betterment SIPC insured?
Yes, securities are protected up to $500,000 including $250,000 cash limit through SIPC membership.
Does tax-loss harvesting work on all Betterment portfolios?
No, tax-loss harvesting does not work with the Crypto ETF portfolio and has limitations in some other strategies.
Can I turn off auto-adjust in Betterment?
Yes, you can disable auto-adjust through your account settings if you prefer manual allocation control.
What is Betterment’s Tax-Coordinated Portfolio?
It manages multiple accounts as one portfolio, placing assets in locations that minimize taxes across account types.