The standard Betterment portfolio for taxable accounts utilizes a national municipal bond ETF to provide exposure to national municipal bonds. For customers with a minimum balance of (or intent to fund) at least $100,000, Betterment offers state-specific municipal bond ETFs for California and New York residents in lieu of the national municipal bond ETF. These ETFs provide exposure to California municipal bonds and New York municipal bonds, respectively.
State-specific municipal bonds are generally advantageous for those in high-income tax brackets. For more background on when it might make sense to invest in local municipal bonds, please see the following article: Muni Bond Exposure: When Does It Make Sense to Go Local?
To switch out national municipal bond ETFs in your portfolio to state-specific bond ETFs, please contact us. We generally recommend making this switch before you fund your account, but if your account is funded, we will sell you out of the national municipal bond ETF over time in a way that attempts to minimize realizing any taxable gains for you.