Investment platform Betterment has partnered with Goldman Sachs (NYSE:GS) to provide the Goldman Sachs Tax-Smart Bonds portfolio.
Not too long ago, Betterment took over Goldman’s Marcus Invest, a Fintech wealth management platform, which is being shuttered. This is part of Goldman’s exit from providing extensive Fintech services for retail.
The new Tax-Smart Bonds portfolio aims to provide a tax-advantaged investment opportunity. As interest rates have remained elevated and the rise of savings opportunities providing returns around or above 5%, some investors have been chagrined about the tax exposure these accounts typically entail. Interest on a savings account is taxed as regular income. Certain assets may benefit from no federal tax exposure or perhaps a lower tax rate.
Betterment states that it is leveraging Goldman’s expertise to offer a packaged portfolio that aims to generate after-tax yield. Designed for individuals in higher tax brackets, the portfolio incorporates short-term bond ETFs that can be personalized. Assets include US Treasuries, corporate bonds and muni bond ETFs. The portfolio is said to be dynamic and not static as allocations are adjusted over time.
Betterment says the portfolio strategy considers market conditions and taxable equivalent yields monthly. Betterment then personalizes portfolio allocations for its clients’ individual tax situations to seek to generate higher after-tax yield.
Sarah Levy, CEO of Betterment, said she is happy to work with Goldman to bring the bond portfolio to their customers.
Padideh Raphael, Global Head of Third Party Wealth at Goldman Sachs Asset Management, explained they are creating a product that caters to investors that want to generate returns while safeguarding their long term wealth.
“This latest collaboration, combining Goldman Sachs’s investment capabilities with Betterment’s innovative technology platform and customer-first approach, will allow us to work together on behalf of clients who seek attractive after-tax bond yields.”
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