Explore Betterment’s Historical Performance
Betterment would have outperformed the average investor with an investment advisor in 88% of all periods over the last decade.
New analysis backtests Betterment portfolios against average advised portfolios.
Betterment portfolios outperformed average advised portfolios 88% of the time.
When it comes to paying your investment fees, it’s a good idea to know exactly what you are buying. In the case of working with an investment advisor, you’re usually banking on getting some alpha, or returns that are above and beyond how the market is performing.
However, as a growing body of research shows, active portfolio management by an advisor doesn’t generally lead to better results for the individual investor. To be sure, the best advisors provide holistic planning value and the sort of smart, low-fee investing approach Betterment champions.
In a new analysis, we backtested the Betterment portfolio’s historical performance against the average returns earned by an investor using an advised portfolio with data assembled by Asset Risk Consultants, an independent investment consulting company. Over more than 30,500 periods, the Betterment portfolio outperformed those advisor-managed portfolios 88% of the time. The findings echo previous research that shows that an all index fund portfolio beats portfolios with active management in the vast majority of cases.
How to Compare Portfolios
We’ve created an interactive widget that allows you to compare a Betterment portfolio to the returns earned by the average advised investor over the past ten years. This tool allows you to explore the data and see how a Betterment portfolio would have performed in a particular date range.
Exploring the Data
Select the stock and bond mix at the top.
Slide the white circle to set a starting date.
Hover over an ending date to see returns for a particular period.
- Optionally, expand the “Additional data, options, and disclosures” section where you can:
- Toggle between percentage returns and an initial $100K investment for the summary data.
- Turn on all portfolios at once (including a few additional benchmarks).
- Find additional data on volatility and returns in the table.
About the Data
The benchmark advised portfolio performance data comes from the ARC Private Client Indices which aggregates actual performance delivered to private clients by more than 60 major global investment managers.
The ARC data is broken up into four slices of equity risk, or Private Client Indices (PCIs.) It is available on a monthly basis, from January 2004 through the most recent completed quarter. This analysis focused on January 2004 through April 2014 (123 months) which offers 7626 possible periods (i.e. 123 possible one month periods, one possible 123 month period, and everything in between.) For each of those 7626 periods, we compared the closest equivalent Betterment portfolio with each of the four PCIs, resulting in 30,504 comparisons. We ran 30%, 50%, 70% and 90% Betterment portfolios against the Cautious, Balanced, Steady Growth, and Equity Risk PCIs, respectively.
The Betterment portfolios won 88.66% of the comparisons. Historical performance of the Betterment portfolio is based on the underlying ETFs, always net of fees. To the extent that an ETF was not in existence over the relevant period, performance is based on the index or asset class that the ETFs tracks. See full disclosure on how we compute historical performance.
This analysis was last updated on April 2014.
Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Betterment or its writers endorse, sponsor, promote, and/or are affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.
FDIC vs SIPC—What’s the difference?
FDIC. SIPC. NCUA. There’s a good chance you’ve heard of most of these acronyms at some point while dealing with your finances. But what exactly does each mean when it comes to your money?
How Much Are You Losing To Idle Cash?
Uninvested cash may feel more readily available compared to when it's invested, but there can be better ways to manage your funds. Find out how.
Investing’s Pain Gap: What You Put Up With To Earn Returns
Markets are frustrating—especially when you look at a year’s worth of returns. Year to year, you can easily experience what we call the pain gap. The key is to not let the pain gap create a behavior gap between your account and market performance.
Explore your first goal
Our high-yield account built to help you earn more on every dollar you save.
This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.
Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.
If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.