Ben Bakkum, CFA, CFP®

Why diversify outside of the US? Aug 2, 2026, 7:14:57 PM Why global diversification is a core part of portfolio construction, not a reaction to recent market performance. U.S. investors often think of the S&P 500 Index (an index of the largest companies in the U.S. by market capitalization) when referring to the performance of the stock market. This is not surprising to hear as most U.S. based investors exhibit a “home bias,” where they focus their investing domestically and less on international. According to MorningStar fund data, assets in international funds amount to only about a quarter of the amount invested in U.S. focused funds. On top of that, U.S. stocks set a high bar for performance globally, outpacing the gains in stocks across Europe, Japan, and emerging markets from 2009 to 2024. It’s become natural to ask, “Can’t I get better returns just sticking with U.S. stocks? Why would my Betterment portfolio have any allocation to companies outside of the U.S.?” Currently, Betterment’s Core portfolio strategy in the 100% stock allocation has a target allocation of more than 37% in international equities. Below, this piece will cover reasons diversifying internationally makes sense, including: The global market portfolio is a starting point for asset allocation There’s no guarantee that U.S. stocks will continue to outperform Diversification creates the potential for more consistent returns Investing in the global market portfolio The short answer is that Betterment constructs all of our portfolios to be representative of the makeup of global investable assets as a whole, and you’ll find that around 36% of the world’s equity assets are invested outside of the U.S. International investments play an important role in reducing the risk of concentration in any one particular country within your portfolio. There’s no guarantee of continued US outperformance We’ve all heard the phrase “past performance is not indicative of future results.” For instance, stocks of one region can string together multiple years of outperformance relative to others before that trend reverses and it enters a period of underperformance. The chart below illustrates this tug of war between U.S. and international developed stocks. While the outperformance experienced by U.S. stocks over the last decade is striking, international developed stocks dominated in the wake of the dot com bubble in the decade before that. “International stocks” is represented by the MSCI EAFE Index. “US stocks” is represented by the MSCI US Index. Past performance is not indicative of future results. You cannot invest directly in the index. Going back further into history, in the ‘80s international developed stocks actually significantly outperformed U.S. stocks. We believe, and many on Wall Street will admit, that trying to time these cycles can be extremely difficult and a more consistent return may be achieved by holding exposure to each geographical region’s stocks over the long-term. Before U.S. stocks’ strong run in the 2010s, investors may have been tempted to allocate more to emerging market stocks based on their momentum during the 2000s. Emerging market stocks had higher returns than U.S. equities in nine of the ten years before 2011. If an investor piled into emerging market stocks in 2011 because of their decade long track record of outperformance, they would have largely missed out on the strong gains in the U.S. over the following 10 years. There also may be reason to believe that markets outside the U.S. have the potential to post strong gains over the next decade. Based on certain valuation metrics, U.S. stocks appear more expensive than their global peers. Also, companies in places such as emerging markets source much of their revenue from quickly growing economies, which may enhance profitability in the future. For example, key firms involved in the semiconductor manufacturing process seeing exceptional demand from the rise of AI exist outside of the U.S. Diversification helps avoid drawdowns and creates the potential for consistent returns International markets are not perfectly correlated with the U.S., meaning they do not move in lockstep. Allocating to markets around the world therefore promotes diversification, helping buffer portfolios from the heightened volatility of individual markets. The chart below ranks the returns of Betterment’s tenured Core portfolio strategy against different regions and asset classes across calendar years, illustrating diversification in action. A 90% stock Core portfolio consistently avoided losses compared to the poorest performing major asset classes of recent history. This was also evident in 2020 where diversification provided downside protection as the U.S. fell into a short recession at the beginning of the year and battled a pandemic. Investors focused on using the S&P 500 Index to benchmark performance will highlight that the index outperformed our Core portfolio in many of the time periods displayed. And while the strength of the U.S. market is undeniable, it is important to not overlook the fact that our Core portfolio still has a sizable allocation to the U.S. Having a strategic, well-diversified portfolio allows investors to obtain exposure to not only markets that outperform like the U.S., but also to international stock markets and other asset classes that can dampen the downside in years where U.S. stocks underperform. The Performance of the Betterment Core portfolio compared with major indices 2020 2021 2022 2023 2024 2025 YTD-2026 U.S. Stocks: 21.3% U.S. Stocks: 27.0% Int'l Dev. Stocks: -14.5% U.S. Stocks: 27.1% U.S. Stocks: 25.1% Int'l EM Stocks: 33.6% Int'l EM Stocks: 24.1% Int'l EM Stocks: 18.3% 90% stock Core: 16.1% 90% stock Core: -14.8% Int'l Dev. Stocks: 18.2% 90% stock Core: 14.1% Int'l Dev. Stocks: 31.2% U.S. Stocks: 15.2% 90% stock Core: 12.8% Int'l Dev. Stocks: 11.3% Global Bonds: -16.3% 90% stock Core: 16.6% Int'l EM Stocks: 7.5% 90% stock Core: 20.4% 90% stock Core: 11.4% Global Bonds: 9.2% Int'l EM Stocks: -2.5% U.S. Stocks: -19.5% Int'l EM Stocks: 9.8% Int'l Dev. Stocks: 3.8% U.S. Stocks: 17.8% Int'l Dev. Stocks: 10.8% Int'l Dev. Stocks: 7.8% Global Bonds: -4.7% Int'l EM Stocks: -20.1% Global Bonds: 5.7% Global Bonds: -1.7% Global Bonds: 8.2% Global Bonds: 0.9% For educational purposes only. Performance information is based on returns data from Bloomberg as of June 30, 2026. Dividends are assumed to be reinvested daily at market closing prices into the fund from which the dividend was distributed. Index performance does not reflect any of Betterment’s management fees, transaction costs or fund expenses. You cannot invest directly in an index. Hypothetical performance information for the Betterment portfolio allocations is based on the time-weighted returns of Betterment portfolios with primary tickers that are at the target allocation every market day (this assumes portfolios are rebalanced daily at market closing prices). Dividends are assumed to be reinvested in the fund from which the dividend was distributed. Performance information presented reflects the impact of market conditions over the period displayed. Market conditions can and will impact performance (including economic crises, political discord, interest rates, exchange rates, and social events). Betterment allocations reflect portfolio holdings as of June 30, 2026 and are net of fund fees and are net of an annual 0.25% management fee, which is the maximum management fee charged by Betterment to Betterment at Work 401(k) plans and participants; however, individual plan fees may vary. The performance information is not net of additional fees for recordkeeping that may be charged to a plan or plan participants. Hypothetical performance information does not include deposits or withdrawals over the performance period. These portfolio allocations are not representative of the performance of any actual Betterment account and actual client experience may vary because of factors including, individual deposits and withdrawals, secondary tickers present in the portfolio through tax loss harvesting, allowed portfolio drift, rebalancing, transactions that do not occur at close of day prices, and differences in holdings between tax-advantaged and taxable portfolios. As such, it is not recommended to use model performance in making investing decisions. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Past performance is not indicative of future results. This information is prohibited from being disseminated to any retail client or person other than the recipient. Reported performance is subject to change as funds/ data providers may revise performance. At Betterment, we build portfolios and provide advice on portfolio allocations that should be suitable for each investor’s risk tolerance to help them reach their investment goals. Diversifying across stock markets, whether in the U.S. or elsewhere in the world, helps in that continuous effort. It may be tempting to chase the high returns that U.S. stocks have posted historically, but investors should recognize that future outperformance is near impossible to predict and that they should position themselves for a wide range of possible outcomes accordingly. This is why as a foundation of Betterment’s portfolio construction process, we start with a diversified global market portfolio.

Get to know your ETF portfolio options Mar 3, 2026, 12:00:00 PM Betterment makes it easy to invest with a range of expert-built ETF portfolios; learn more about your options. Betterment helps take the stress out of investing with a range of expert-built portfolio options, made of generally low-cost ETFs (exchange-traded funds). Given the breadth of available choices, it’s natural to wonder which portfolio is right for your financial situation. Keep in mind, your plan may have different investment options—log in to see what’s available. Our ETF portfolios have been designed to help investors, like you, reach their financial goals. While portfolios that combine stocks and bonds possess similar expected risk and return profiles, Betterment will recommend an investment allocation for you, based on the time horizon and goal type you select. You can also adjust your diversification and risk preferences. For most portfolios that hold both stocks and bonds, our auto-adjust feature systematically glides your portfolio(s) to a lower overall risk level as you get closer to, enter, and progress through retirement. This feature is very similar to a glide path, which is found in target-date funds (TDFs). It’s great for those that want to “set it, and forget it.” With that, let’s review your portfolio options. Core Well-diversified, low-cost, and built for long-term investing, the Core portfolio features a broad collection of ETFs made of thousands of stocks and bonds from around the world. This is the default investment option for those who do not specify a portfolio strategy. Innovative Technology A well-diversified portfolio allocated similarly to the Core portfolio, but with a subset of stocks allocated to high-growth potential companies such as clean energy, semiconductors, robots, virtual reality, blockchain, and nanotechnology. The investments use artificial intelligence, specifically natural language processing (NLP), and fundamental security analysis to identify leaders in thematics such as AI, digital transformation, clean energy, and medical innovation. This comes with increased exposure to risk. Value Tilt A well-diversified portfolio allocated similarly to the Core portfolio, but with a subset of the stocks allocation focused on potentially undervalued U.S. companies, according to certain financial metrics. Broad Impact A well-diversified portfolio that invests in companies that rank highly on environmental, social, and corporate governance (ESG) criteria. Climate Impact A well-diversified portfolio that invests in companies working to lower carbon emissions, fund green projects, and divest from holders of fossil fuel reserves—while still designed for potential long-term growth. Social Impact A well-diversified portfolio that invests in companies actively working toward minority empowerment and gender diversity as part of its long-term strategy. Goldman Sachs Smart Beta Targets companies that have potential to outperform the broader market over the long term. Diverse and relatively low-cost, this portfolio comes with higher exposure to risk. Flexible portfolio A Flexible portfolio gives you more control over your investments, and allows you to modify the individual asset class weights to best fit your preferences. We’ll provide guidance on the risk exposure and diversification of your portfolio, based on your adjustments. See when using a Flexible portfolio might be right for you. After you make a portfolio selection, Betterment will handle the rest. Here are some things to keep in mind: All portfolios benefit from auto-rebalancing, which returns the value of all allocated funds back to the target weight (after the portfolio drifts with market movements). Rebalancing may be subject to a drift threshold and account balance minimum. Although changing a portfolio’s asset allocation and fund selection can cause changes in the portfolio’s performance, Betterment has designed each portfolio to be suitable in terms of its riskiness and return potential for a given time horizon and level of risk. Which is to say, you should feel comfortable choosing a portfolio based on your convictions and values. If you’re uncertain where to start, the Betterment Core portfolio is a great way to go—and it is the portfolio used by the majority of Betterment users. Betterment is a fiduciary investment advisor that monitors market action and portfolio performance, and will periodically update asset allocation or include more cost-efficient underlying funds to help optimize your portfolio performance. We’re here to help you make decisions that bring your goals into focus, and be invested in your future.

Will tariffs affect your holiday spending this year? Nov 6, 2025, 12:18:32 PM See how tariffs and inflation could raise holiday costs. Key takeaways: Tariffs remain high, placing upward price pressure on imported goods this season. Inflation holds near 3%, though goods prices have accelerated. Holiday staples like turkey and sugar cost more, driven by tariffs and limited supply. Imported gifts and décor face 10–20% hikes, with fewer options on store shelves. Plan ahead and automate savings to stay on track despite short-term price swings. When the Trump administration raised tariffs in April, investors and consumers worried higher import costs could push prices up. Since then, officials have paused some increases, struck deals, and walked back threats, averting the worst of what seemed possible last spring. Tariff rates overall remain much higher today than they were last year; however, and have the potential to affect the costs of this year’s holiday season. A quick look at inflation—and what’s behind the numbers The good news: The trade war hasn’t caused a sharp spike in overall inflation. Prices are rising about 3% a year, which is still above normal—but much lower than the surge that followed the pandemic (as demonstrated in the chart below). In underlying data, we've seen the impact show up most in goods inflation, as opposed to services, where price increases have continued to moderate in the last several years. Where tariffs may show up this holiday season As the holidays approach, some categories are climbing faster than others. For instance, Thanksgiving turkeys are expected to be about 40% more expensive this November, according to the American Farm Bureau Federation. That increase isn’t only about tariffs, as outbreaks of avian flu continue to shrink the supply of birds, yet import taxes on equipment and packaging are also adding to costs for farms and retailers. Seafood lovers may notice changes too. Tariffs on shrimp and salmon are pushing up prices for grocers and restaurants, while fruit and vegetables, from Mexico and South America, face new inspection and shipping fees that could raise shelf prices. When it comes to beverages, tariffs on European wine and spirits are upping the purchase price, so you might want to consider toasting with U.S.-based options this year. Bakers might also feel a pinch this season. Roughly 90% of the sugar used by U.S. manufacturers comes from abroad, and prices have climbed about 30%, according to the Organic Trade Association. New limits on organic sugar imports—and a 50% tariff on Brazil, which provides nearly 40% of America’s organic supply—are driving costs even higher. With cocoa prices up sharply, driven by both crop shortfalls and new tariffs on West African imports, chocolate desserts could also be more costly. It’s a tough year to bake on a budget. When it comes to holiday gift giving, The New York Times’ Wirecutter found that “price changes are more apparent among individual products than across categories.” One example: The editors highlight that the Lenovo IdeaPad Flex 5i Chromebook Plus, held steady at $500 from October 2023 until April 2025, when it jumped to $600. Electronics typically get cheaper over time, so that price increase shows how tariffs and supply challenges can ripple through the market. Other imported goods—like toys, apparel, and holiday décor—could see modest price increases too. Shoppers ready to deck the halls might pause at the new price increases. Roughly 87% of U.S. Christmas decorations come from China, where tariffs are impacting both higher prices and tighter supply. Retailers expect 10–20% price increases on artificial trees, while some brands are planning to ship fewer trees overall. Even with a 90-day tariff pause, most orders were placed months ago, meaning shoppers will see fewer options on shelves. Meanwhile, books, digital services, and U.S.-made items are expected to stay about the same. How to manage your holiday budget without stress Even with prices up in some areas, a few smart moves can help you stay in control—and even come out ahead. The goal isn’t to cut back on what matters, but to plan with intention. Start early. Shopping before peak demand gives you more choice and less pressure. It’s also easier to compare prices, make use of cash-back offers, and spread out your spending rather than watching it all hit your card statement at once. Automate your savings. Set up recurring deposits so your holiday fund grows automatically in the background. Betterment customers using recurring deposits earned nearly 4% higher annual returns than those who didn’t. Stick to your plan. Separate what you’ll spend this season from your long-term goals. Having that clarity helps you enjoy the holidays guilt-free, without hindering your broader financial plan. Bonus tip: After the holidays, keep your recurring deposit running. Turning a seasonal habit into a year-round routine is one of the easiest ways to stay consistent and grow your wealth over time. Based on Betterment’s internal calculations for the Core portfolio over 5 years. Users in the “auto-deposit on” groups earned an additional 0.6% over the last year and 1.6% annualized over 10 years. See more in disclosures. The bigger picture: Tariffs come and go, but your plan should endure Tariffs and trade shifts are part of the economic cycle. Prices may rise or fall from year to year, but for investors, discipline often matters more than timing. Even if this holiday season brings a few higher price tags, your financial plan doesn’t have to waver.