Performance Disclosure

Performance Disclosure

Actual performance information for Betterment portfolios since creation (i) accounts for the timing of trades, withdrawals, deposits, and allocation changes, (ii) is inclusive of dividends or interest (applicable to cash accounts), (iii) is net of Betterment’s management fee, and if you are a client with a third-party advisor or plan advisor, any management fee charged by the third-party advisor, and (iv) will reflect the impact of any material market or economic conditions on your portfolio’s performance. Management fees are accrued daily and charged monthly or quarterly. Management fees do not include any custodial or recordkeeping fees charged in connection with an HSA or 401(k). Market conditions can and will impact your performance, and past performance is not indicative of future results. 

The actual performance of your portfolio is reported based on two different methods. We report both Time-Weighted Return (“TWR”) and Individual Rate of Return  (“IRR”), otherwise known as Internal Rate of Return, to provide two different, but equally valuable, perspectives on how you should be understanding the performance of your Betterment portfolio over time.

A. Time-Weighted Returns

TWR is a measure of the actual cumulative performance of your Betterment portfolio over time. TWR incorporates dividends (including their reinvestment) or interest (applicable to cash accounts) and eliminates the distorting impact resulting from the size and timing of deposits to and withdrawals from your portfolio, as well as any allocation changes you may have made historically. TWR calculations are net of Betterment’s management fee, and  if you are a client on Betterment Advisors Solutions, any management fee charged by the third-party Advisor. TWR calculations are also net of all fund fees, which are included in the prices for the times the funds existed in your portfolio.

TWR is a widely used approach that allows you to compare the returns on your Betterment portfolio against the performance of your investments outside of Betterment, or understand how your performance compares to common indexes or other educational benchmarks. Learn more about TWR.

B. Individual Rate of Return

IRR, in contrast to TWR, is a money-weighted return figure. IRR is a measure of the actual cumulative performance of your Betterment portfolio including the impact of your deposits, withdrawals, and allocation changes while still accounting for management fees, fund fees, and dividends (including their reinvestment) or interest (applicable to cash accounts). As with TWR, IRR calculations are net of all applicable management fees, including Betterment’s management fee and  if you are a client on Betterment Advisor Solutions, any management fee charged by the third-party Advisor. IRR calculations are also net of all fund fees, which are included in the prices for the times the funds existed in your portfolio.

IRR therefore provides you with the rate of return on the dollars that you personally deposited into Betterment. Learn more about IRR. 

Fund Benchmarks (Educational Benchmarks)

Performance information for the fund benchmarks is based on the time-weighted returns of the fund. Dividends are assumed to be reinvested daily at market closing prices into the fund from which the dividend was distributed. Underlying fund fees are included in the prices for the times they existed. Performance does not include Betterment's annual management fee. Performance is provided for illustrative purposes to represent broad market behavior and is not attributable to any actual Betterment portfolio nor does it reflect any specific Betterment performance.