Wealthsimple Portfolio Disclosure
For Transferred Wealthsimple Portfolios
Transferred Wealthsimple portfolios are constructed of securities that former Wealthsimple customers held prior to their transfer to Betterment. There are several risks that are different from the risks associated with investing in Betterment’s standard portfolio (the “Core Portfolio”) that investors should consider when deciding whether they wish to remain invested in a transferred Wealthsimple portfolio.
The ETFs in a transferred Wealthsimple portfolio may be less diversified than the ETFs for comparable asset classes in Betterment’s Core Portfolio. Transferred Wealthsimple portfolios do not include exposure to international bonds, which are included in the Betterment Core Portfolio. Investing in international bonds is intended to provide global interest-rate diversification. Additionally, the stocks in the Core Portfolio include a tilt toward size and value, meaning the Core Portfolio invests more in companies with smaller capitalizations and companies with a low price relative to their perceived intrinsic value. Transferred Wealthsimple portfolios do not tilt toward size and value factors but instead toward low volatility, which aims to reduce exposure to stock market volatility. This type of strategy can potentially minimize the peaks and valleys of typical market-cap weighted stock allocations. Wealthsimple portfolios include an investment in gold whereas the Betterment Core Portfolio does not include an investment in gold or any other commodity asset class. Additionally, at the 100% bond allocation, transferred Wealthsimple portfolios invest in different classes of bonds than the 100% bond allocation of the Betterment Core Portfolio. Wealthsimple portfolios invest in U.S. municipal and treasury bonds at the 100% bond allocation, whereas Betterment offers a 100% bond allocation that invests in U.S. short-term investment grade bonds and treasury bonds. For additional details on the comparison of the portfolios, see our Wealthsimple Portfolio Comparison FAQ.
Investors who retain a transferred Wealthsimple portfolio may incur additional fund costs compared to investors in Betterment’s Core Portfolio because the ETFs in the Wealthsimple portfolio may have higher aggregate expense ratios that the funds used in Betterment’s Core Portfolio. The specific fees for each fund in a transferred Wealthsimple portfolio are listed in the fund’s prospectuses, which are available on the portfolio tab in your account.
Investors who retain a transferred Wealthsimple portfolio should be aware that a transferred Wealthsimple portfolio may have different portfolio weights relative to Betterment’s Core Portfolio, and will deviate from the makeup of Betterment’s Core Portfolio. Betterment may add additional asset classes to its Core Portfolio and may otherwise change the composition of its portfolios in a variety of ways, including but not limited to, altering the ETFs in which it invests, and increasing or decreasing tilt in the portfolio. Wealthsimple portfolios will not be monitored for future updates and any future portfolio improvements to Betterment’s Core Portfolio will not be reflected in a transferred Wealthsimple portfolio.
Several features of Betterment’s service will not work or will work differently for a transferred Wealthsimple portfolio. For goals for which a transferred Wealthsimple portfolio is retained, Betterment’s tax loss harvesting feature (“TLH”) will not work. Tax loss harvesting will work for other goals in taxable accounts for which a transferred Wealthsimple portfolio is not elected or maintained, though there may be reduced opportunities for TLH to harvest losses in these other goals if a transferred Wealthsimple portfolio remains elected for at least one goal in the account. See Betterment’s TLH disclosures for further detail. Additionally, investors cannot use Betterment’s tax coordinated portfolio feature for any accounts in which the Wealthsimple portfolio has been retained.
Betterment’s automatic rebalancing feature will work with transferred Wealthsimple portfolios to reduce drift to the portfolio’s target allocation. Transferred Wealthsimple portfolios may experience an automatic rebalance upon the initial migration to Betterment in the event that the portfolio has drifted more than 3% from its target allocation.
Betterment’s advice features are limited with transferred Wealthsimple portfolios. Betterment does not recommend an allocation for any transferred Wealthsimple portfolio. Betterment’s risk advice, which alerts investors when their allocations are too risky or too conservative relative to their goals’ time horizons, is unavailable for Wealthsimple portfolios. Investors will similarly not be able to review projections for a transferred Wealthsimple portfolio unless they input goal amount and time horizon information. Investors also will not be able to adjust their allocations in transferred Wealthsimple portfolios. Betterment will not recommend a glide path for goals for which a transferred Wealthsimple portfolio is retained, and Betterment’s auto-adjust feature is unavailable for a Wealthsimple portfolio.
Last updated: June 7, 2021