TABLE OF CONTENTS
How it Works
- What is the BlackRock Target Income portfolio?
- How is this portfolio different from the Betterment portfolio?
- What is the difference between this portfolio and Betterment’s retirement income strategies?
- What funds are used in the BlackRock Target Income portfolio?
- Why are we only using bonds?
- How frequently will the portfolio be updated?
- Will Tax Loss Harvesting+ and Tax Coordination work for the income portfolio?
- How do I receive the income generated from the portfolio?
- How frequently is income paid from the portfolio holdings?
What is the BlackRock Target Income portfolio?
The income portfolio is comprised of only bond ETFs. The portfolio is suited for an investor who is looking to generate a steady stream of income. To put this into context, the portfolio seeks to generate bond interest from the funds periodically, at a rate that is generally higher than a portfolio that includes both stocks and bonds, such as the Betterment portfolio.
How is this portfolio different from the Betterment portfolio?
The Betterment portfolio seeks to deliver both income and capital gain. The BlackRock Target Income portfolios are designed for those in retirement or those seeking investment income while minimizing capital losses. Customers can select from four income portfolios at varying levels of risk.
The best way to think about this is in comparison to the Betterment portfolio. The Blackrock Target Income Portfolio is not as concerned about picking investments that will grow over time. It focuses on investments that seek to generate income.
A far greater share of the the Betterment portfolio’s returns come from capital appreciation. The Betterment portfolio can still earn income (dividends), but likely not as much as the Income Portfolio.
What is the difference between this portfolio and Betterment’s retirement income strategies?
The Betterment Retirement Income strategy draws down on principal. Betterment’s Retirement Income strategy is a total return approach that focuses on income generation and growth. The BlackRock Target Income portfolio’s primary mandate is to generate income for investors, without much consideration regarding growth and appreciation of principal.
What funds are used in the BlackRock Target Income portfolio?
For more information on the construction of the portfolio strategy, please click here.
Why are we only using bonds?
There are many ways to implement an income portfolio. Some of those ways include adding dividend producing equities. The Blackrock Target Income Portfolio does not because it wants to keep the volatility low. Even long-term and high-yield “junk” bonds have historically had approximately half the risk of large cap equities.
How frequently will the portfolio be updated?
Generally 4 to 6 times per year.
Will Tax Loss Harvesting+ and Tax Coordination work for the income portfolio?
Tax Loss Harvesting+ (TLH) and Tax Coordination will not work with this portfolio. This is because TLH+ requires volatility to harvest a lost, and bonds are not as volatile as stocks. Tax Coordination requires high growing assets to produce meaningful alpha, and bonds have lower long-term returns than equities.
How do I receive the income generated from the portfolio?
Income generated by the portfolio will be automatically reinvested. You can always set up a recurring withdrawal of the approximate amount of the income yield your portfolio earns.
How frequently is income paid from the portfolio holdings?
Most income is paid on a monthly basis, but it can be quarterly depending on the fund.
A Guide to Investing in Cash Alternatives
What is the role of cash in investing? Learn more about the role of cash in planning your finances, building a diversified portfolio, and pursuing investment goals.
What is Tax Coordination? How Asset Location Works at Betterment
What is Betterment's approach to asset location? It's called Tax Coordination, and it's a built-in tax optimization strategy for retirement goals at Betterment.
What’s Inside the Betterment Portfolio Strategy?
Explore the asset classes in Betterment's recommended set of portfolios. Then, take a look at the exchange-traded funds (ETFs) underlying each part of the portfolio strategy.
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