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Understanding Our Goldman Sachs Smart Beta Portfolio

Ever heard of factor investing? Learn more about our Goldman Sachs Smart Beta portfolio, which favors investments based on four specific factors.

Articles by Betterment Editors

By the Editorial Staff
Betterment Resource Center  |  Published: September 1, 2018


TABLE OF CONTENTS


What is the Goldman Sachs Smart Beta portfolio?

The Goldman Sachs Smart Beta Portfolio strategy invests in stocks and bonds that have specific characteristics. The strategy favors stocks based on four well-established drivers of performance, often referred to as factors.

The factors are:

  • Good value
  • Strong momentum
  • High quality
  • Low volatility

The Goldman Sachs Smart Beta portfolio has 101 portfolio variations, ranging from 0% stocks to 100% stocks in 1% increments.

For more information on the construction of the portfolio strategy, please click here.

How is it different than the Betterment portfolio?

The Smart Beta portfolio consists of Smart Beta ETFs that include stocks from companies screened for the four Smart Beta factors—value, high quality, strong momentum, and low volatility.

You will still pay the regular Betterment management fee. The fees for the underlying funds are a bit more expensive, particularly at higher stock allocation levels.

Going from 0% to 100% stocks in the portfolio corresponds with weighted fund fees increasing from 0.13% to 0.22%. For Betterment portfolios, weighted fund fees generally decline as stock allocation increases, starting at 0.15% at 0% stocks and declining toward about 0.07% at 100% stocks.

Can I have multiple portfolio strategies in one account?

Yes, you can have a different portfolio strategy for each goal in your account. The only exception to this is goals that are tax coordinated because those goals must be all the same strategy.

You can also have multiple goals with the same portfolio strategy but with different allocations. This allows you to take full advantage of our goal-based investing approach.

What is your affiliation with Goldman Sachs?

We partner with Goldman Sachs Asset Management to bring you the Smart Beta portfolio option. We do so to provide more personalized solutions that align to your goals, preferences, and values.

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