Target Income Portfolio

Target Income built with BlackRock: New name, new strategy BlackRock is updating its Target Income strategy. Here's what's changing, what's staying the same, and how we'll manage your transition. Betterment offers a range of investment options to help investors stay in the market. As part of that commitment, Betterment partners with third-party asset managers like BlackRock to offer additional portfolio choices, including an all-bond strategy. As markets evolve, investment managers may refine or update their approaches. BlackRock is discontinuing the legacy BlackRock Target Income portfolio and is launching a new strategy in partnership with Betterment, Target Income built with BlackRock, which introduces an updated investment framework designed to build a more resilient income portfolio across market environments. Betterment is partnering with BlackRock to transition existing investors to the new strategy. Let’s discuss what’s changing and what’s remaining the same. What’s changing A new investment framework and team The previous strategy relied heavily on a quantitative approach targeting specific yields. The new strategy uses the Multi-Asset Income (MAI) framework from BlackRock’s Multi-Asset Strategies and Solutions (MASS) team, which combines data-driven analysis with fundamental research to build a more adaptable income portfolio. The goal: Build a more resilient income portfolio across market environments, with thoughtful attention to credit risk, duration, and diversification. The strategy will continue to maintain and further lean into exposures in the form of: Expanded access to different bond sectors like emerging market and high-yield debt, as well as collateralized loan obligations (CLOs) for example. Flexibility in shifting across duration and fixed-income sectors, using both active and passive funds. The new approach will also incorporate a high-yield benchmark, the iBoxx USD Liquid High Yield Index, to better reflect the level of credit risk in the portfolio—rather than relying solely on the Bloomberg U.S. Aggregate Bond Index, which tracks investment-grade bonds. What’s staying the same A focus on income Target Income built with BlackRock will remain an all-bond strategy designed to generate income. Four income levels Investors will still be able to choose from four risk levels—Core, Moderate, High, and Aggressive. Built with BlackRock The strategy continues to be constructed with BlackRock, one of the world’s largest asset managers, using ETFs to provide diversified exposure across fixed income sectors. Overall, BlackRock will continue to provide fund selection and apply its broader house and macro views to the strategy’s asset allocation decisions. However, the management of the strategy will shift to BlackRock's MASS team and MAI framework described above. How Betterment will manage the transition to Target Income built with BlackRock Betterment will manage the transition for investors. For taxable accounts, Betterment will gradually transition investors with our technology, including proactive rebalancing, designed to seek the most tax-efficient path. Tax-advantaged accounts such as Betterment IRAs and Betterment 401(k)s won’t see any tax impact as a result of these updates. To learn about the new Target Income built with the BlackRock portfolio, check out the relevant portfolio pages and disclosures on our website. Investors can also see their updated holdings in the Betterment app with only a few clicks. It’s yet another example of how we make it easy to be invested.