Benchmarks

With U.S. markets struggling, is now the time to go global? Here’s the case for keeping a little international exposure in your investing. U.S. stocks have been the envy of the world since 2010, generating nearly 4 times the returns of their international counterparts. But since April 2, President Trump’s tariff policies have dragged down U.S. stocks and left investors unnerved. Does this mean the U.S. market is toast? Certainly not, but it does signal a potential shift in foreign investment, which means that if you haven’t already, now may be the time to consider diversifying globally. And we can help on that front. Hello, world. We're here to invest. The U.S. market is big, but it’s not the only game in town. Hundreds of billions of dollars in assets trade hands in international markets each day. It's why the Betterment Core portfolio, built on the idea that more diversification equals less risk, roughly mirrors the relative weights of global markets. Like we mentioned above, the U.S. market has been on an absolute tear the past 15 years, and even more so since 2020. This record winning streak has fueled our home bias, or the tendency for American investors to favor American markets. But history shows a pendulum that typically swings back and forth every 5 to 10 years. International markets outperformed in the 2000s, for example, and they saw a huge spike in the late 80s. So what’s an investor to do? If you're investing for the long term, the odds are good the U.S. market will hit at least one extended rough patch in that time. And in that scenario, a globally-hedged portfolio will very likely smooth out your returns from year to year. We’re seeing this start to play out in 2025, with the Betterment Core portfolio and its global diversification outperforming many common U.S.-only funds. As of 5/2/2025. Betterment Core composite actual time-weighted returns: 10.52% over 1 year, 12.35% over 5 years, and 7.30% over 10 years as of 5/2/2025. Composite performance calculated based on the dollar weighted average of actual client time-weighted returns for the Core portfolio at 90/10 allocation, net fees. Performance not guaranteed, investing involves risk. That being said, diversification is a sliding scale. There is no pass/fail, no good or bad. If you’re looking for a little more international exposure, but not to the extent of one of our pre-built portfolios, you can invest in our Flexible portfolio and tailor your allocation as you see fit. But if you’re less experienced in investing, and simply want an option that requires less work, then let us do the recalibrating for you. We update our pre-built portfolios annually, finetuning our U.S. and international exposures based on the latest long-term projections. We can’t predict when the global tides will turn, but we can make sure you don’t miss out when they do.

The pitfalls of comparing portfolio returns How to take stock of your stocks (and bonds)—here, there, everywhere. Investing can feel like a leap of faith. You pick a portfolio. You deposit money. Then, you wait. Trouble is, it takes a while for compound growth to do its thing. Using the Rule of 72 and historical stock returns, it takes roughly a decade for every dollar invested to double. That’s a lot of time for second-guessing. You may peek at your portfolio returns and wonder, “Could I be doing better?” Don’t worry; it’s normal to question whether we’re making the right choices with our money. But comparing different portfolios can be tricky. Variables abound. There’s the composition of the portfolios themselves, but also their fees and tax treatments. So whether you’re sizing us up with rival money managers, or with the stock indexes you see most often in the news, we’re here to help you level set. The ABCs of apples-to-apples comparisons Let’s start with a statistic we’re quite proud of: Since launching in 2011, our 90% stock Core Portfolio has delivered over 9.0% returns*. Those are the returns of real Betterment customers, minus fees, and taking the timing of deposits and withdrawals out of the equation. This helps focus more on the performance of the portfolio itself. *As of 12/31/2024, and inception date 9/7/2011. Composite annual time-weighted returns: 12.7% over 1 year, 7.9% over 5 years, and 7.8% over 10 years. Composite performance calculated based on the dollar-weighted average of actual client time-weighted returns for the Core portfolio at 90/10 allocation, net of fees, includes dividend reinvestment, and excludes the impact of cash flows. Past performance not guaranteed, investing involves risk. So, is 9.0% good? Well, it depends on the comparison. Stock indexes like the S&P 500 and Dow Jones dominate the news, but they’re hardly comprehensive. For one, they exclude bonds, a lower-yield staple of many portfolios. There’s a reason why regardless of the portfolio, we recommend holding at least some bonds. They help temper market volatility and preserve precious capital. Secondly, popular indexes also largely ignore international markets. The S&P, for example, typically represents less than half the value of all investable stocks in the world. Our globally-diversified portfolios, meanwhile, spread things out in service of a smoother investing journey. We're built for the long run, and history has shown that American and International assets take turns outperforming each other every 10-15 years. So the modest amount of international exposure in many of our portfolios means this: you're in a better position to profit when the pendulum swings the other way. Now, taking all of this to heart isn't easy. Not when the S&P returns 20% in a given year. At moments like these, it’s perfectly normal to feel FOMO when looking at the returns of your globally-hedged investing. To keep the faith, it helps to keep the right benchmark(s) in mind. Not all diversification is created equal We’re not alone in offering globally-diversified portfolios. But two portfolios, even with similar stock-to-bond ratios, can take very different paths to the same end goal. Tax optimization, market timing, and fund fees can all impact your investing’s bottom line as well. Some investors compare providers by investing a little with each, waiting a few months, then comparing the balances. This sort of trialing, however, may not tell you much. When it comes to our portfolios, you can find better comparisons in two particular ETFs that seek to track a wide swath of the market: ACWI for stocks and AGG for bonds. See how your Betterment portfolio stacks up against them in the Performance section for any goal or account. Simply scroll down to “Portfolio returns,” click “Add comparison,” and pick from the available allocations of stocks and bonds. We show your “Total return” by default at Betterment, otherwise known as the portfolio’s total growth for a given time period. You can also see this expressed as an “Annualized” return, or the yearly growth rate you often see advertised with other investments. Putting your performance in perspective Comparison may be the thief of joy, but it’s okay, prudent even, to evaluate your investing returns on occasion. Once or twice a year is plenty. The key is to steer clear of common pitfalls along the way. Like comparing your globally-diversified apple to someone else’s all-U.S. orange. Or cherry-picking a small sample size instead of a longer, more-reliable track record. It’s easier said than done. That’s why we bake more relevant comparisons right into the Betterment app. It’s also why we produce content like this. Because if there’s a silver lining to the slow snowballing of compound growth, it’s that you have plenty of time to brush up on the basics.