Robo-Advisor Betterment Adds Goldman & Blackrock Portfolio Strategies

Betterment, the largest independent online investment advisor, will now offer two new portfolio strategies: a smart beta portfolio strategy and an income portfolio strategy. Betterment has selected the portfolio strategies from BlackRock and Goldman Sachs Asset Management (GSAM) designed to meet users diverse needs and financial circumstances. Betterment currently manages more than $10 billion in assets for more than 270,000 customers.

Jon Stein, founder and CEO of Betterment, explained that Betterment has an increasingly diverse customer base that have different needs;

“Adding these options to our existing portfolio strategies will help us deliver on our promise to provide customers with a personalized investment plan tailored for their individual needs and preferences,” said Stein.

Blackrock Target Income Portfolio Strategies

Betterment has selected BlackRock’s income portfolio as it was created for clients averse to stock market risk, but who seek to target higher levels of income than cash savings accounts deliver. The portfolio invests 100% of assets in U.S. bonds and international bonds issued in U.S. dollars. The portfolio strategy prioritizes capital preservation and aims to generate cash income.

Goldman Sachs Smart Beta Portfolio Strategies

To help meet the preferences of investors seeking long-term outperformance of Betterment’s core portfolio strategy and who can accept periods of underperformance (IE Volatility), Betterment is now offering a smart beta strategy from GSAM.

The Goldman Sachs Smart Beta portfolios are globally diversified across stocks and bonds, but are weighted by economically intuitive factors rather than a pure passive market cap strategy based on market capitalization. This portfolio strategy tends to be more heavily allocated to emerging markets, as well as small cap stocks in both the U.S. and developed countries. The strategy also incorporates REITs and proportionally invests more in high-yield bonds with longer durations, compared to Betterment’s core portfolio strategy.

Alex Benke, CFP and VP of Financial Advice and Investing at Betterment, said the new options were added due to customer demand.

“We’re excited to be partnering with Blackrock to provide this new portfolio, and believe that a significant portion of our growing customer base may gain peace of mind by targeting a steady stream of income, while minimizing the risk of losing principal.”

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