Mindy Yu, CIMA®

Betterment expands 401(k) investment options with new mutual fund lineup Oct 24, 2025 11:04:34 AM Betterment now offers mutual funds alongside ETFs and advisor-managed options, giving 401(k) sponsors more flexibility and fiduciary oversight for participants. Key takeaways: Betterment now offers a mutual fund lineup alongside managed ETF portfolios for 401(k) plans. Betterment serves as a 3(38) investment manager, selecting and monitoring investment options for sponsors. Employers can choose from ETFs, mutual funds, or advisor-managed lineups to fit plan needs. Target date and diversified fund options help participants stay aligned with long-term goals. Automated tools and fiduciary oversight simplify plan management and support participant outcomes. How your employees can invest with Betterment Betterment serves as a 3(38) investment manager, meaning we take on the responsibility of selecting, monitoring, and maintaining the investment options offered within your company’s 401(k) plan. We act in the best interests of plan participants, helping you meet your fiduciary responsibilities. When serving as an investment fiduciary, Betterment constructs and oversees the investment options offered through your plan, providing the ongoing management and monitoring needed to help ensure investment options remain appropriate for your participants. Our Investing team is made up of experienced professionals who power this process so your team doesn’t have to handle these day-to-day responsibilities. Betterment’s investment options Betterment offers a range of investment choices designed to meet the diverse needs and preferences of your employees. These include managed ETF portfolios along with a flexible portfolio option, or a traditional mutual fund lineup. Plan sponsors can choose which lineup to use within their plan. For plan sponsors who choose to work with a third-party financial advisor, our platform can host a customized fund lineup as well, where the third party advisor takes on the role of 3(38) or 3(21) investment advisor. The Betterment mutual fund lineup Betterment now offers a mutual fund lineup of diversified funds for employees to invest their 401(k). This lineup includes a relatively low-cost target date fund series (serving as the plan’s QDIA). The target date fund series maintains an embedded glide path that will de-risk and have greater allocation to bonds as the participant nears the retirement year. The lineup also includes a set of mutual funds representing major asset classes such as U.S. and international stocks and bonds, real estate investment trusts (REITs), and a money market fund. More details on the fund lineup can be found here. All these investment options have the benefit of Betterment maintaining fiduciary oversight as the 3(38) investment manager. Betterment’s managed ETF portfolios and “Build-your-own” Our flagship, and most commonly used, investment offering includes a broad range of professionally managed ETF portfolios. Most of these portfolios feature 101 risk levels, functioning similarly to target date funds, but with a glide path that adjusts based on each employee’s time horizon, goals, and preferences. The Betterment Core portfolio The Betterment Core portfolio serves as the plan’s qualified default investment alternative (QDIA) and where employees commonly invest. It’s a globally diversified, cost-effective portfolio that invests across major asset classes and markets. Employees can also choose among related strategies with certain market tilts, that share the same global diversification framework of the Core portfolio: Value Tilt portfolio: Focused on U.S. companies considered undervalued based on certain financial metrics. Innovative Technology portfolio: Provides exposure to high-growth sectors such as clean energy, semiconductors, and robotics, offering additional risk and return potential. The Socially Responsible Investing portfolios For employees who want their investments to reflect certain values, Betterment offers three Socially Responsible Investing (SRI) portfolios: Broad Impact portfolio Social Impact portfolio Climate Impact portfolio Each offers a different focus within environmental, social, and governance (ESG) investing principles. Third-party partner portfolios Betterment also partners with leading asset managers to expand investment choice: Goldman Sachs Smart Beta portfolio: A diversified ETF portfolio that uses a factor-based approach to target potential long-term outperformance relative to traditional market indexes. BlackRock Target Income portfolio: A 100% bond ETF portfolio designed for income generation and lower volatility, an option that may be more suitable for participants with shorter time horizons or those already in retirement. Flexible portfolios (“Build-your-own”) Flexible portfolio provides employees the ability to build their own portfolio with the funds and asset classes that we have curated. As they build their own portfolio, employees will receive guidance on whether the portfolio they are building is diversified enough or too risky depending on our recommendation on how they should be invested, based on their time horizon. More details on each of the strategies can be found here. Using a third-party financial advisor Some plans may prefer to work with a third-party advisor who either serves in the 3(21) or 3(38) investment manager capacity. A 3(21) is different from a 3(38) in that the investment advisor has non-discretionary authority and can only make recommendations that must then be approved by the plan sponsor, as the fiduciary for the plan. If you prefer to bring on an advisor to curate a custom lineup, the advisor has access to over 10,000 mutual funds and ETFs to choose from. Automation makes investing for retirement easier Along with each of these investment options, employees have access to automated tools designed to help make saving for retirement simpler and more efficient. Betterment’s technology supports employees by: Automatically rebalancing portfolios: Portfolios are periodically rebalanced to maintain their target allocations due to allocation changes or market drifts. We also use contributions, withdrawals, and dividends to help keep investments aligned with the target. Applying Tax Coordinated Portfolios (TCP): Also known as asset location, this feature places less tax-efficient assets in more tax-advantaged accounts, such as traditional or Roth 401(k)s, while maintaining an overall portfolio allocation across account types. This approach is designed to help improve after-tax outcomes over time. Providing personalized guidance: Employees can access in-app tools and educational resources to help determine how much to save and how to allocate their investments based on their goals and timelines. Saving for retirement is important, and Betterment’s automated features are built to help make the process easier for employees. Email 401k@betterment.com to learn more about investment options and features.

2025 portfolio updates: What plan sponsors need to know Jan 29, 2025 9:00:00 AM Small updates to Core, Value Tilt, SRI, and Innovative Tech are coming soon. As part of Betterment’s investment oversight serving as your 3(38) investment fiduciary, our Investing team regularly reviews and updates our portfolio strategies to align with changing market conditions. As a fiduciary, Betterment is required to act in your employees’ best interests. We do this in part by regularly adjusting our portfolios' asset allocations, or the specific weights of asset classes (i.e., stocks and bonds) and subasset classes (large- cap stocks, long-term bonds, etc.). For 2025, we are implementing strategic adjustments across multiple portfolios that are guided by updated capital market assumptions and asset class expectations. Let’s quickly walk through our approach to portfolio management, and then we’ll preview the changes coming in the weeks ahead. How we evaluate and manage our portfolios Betterment runs a rigorous, quantitative process to formulate long-term expectations for both the returns and risk levels of various asset classes. Our aim is to maximize your expected return relative to risk, so that you’re compensated appropriately for the level of risk you take with your investing. From there, we simulate thousands of paths for the market, and average the optimal asset allocations for each to build more robust portfolio weights. This “Monte Carlo” technique is ideal for the areas of life where random variables are everywhere, areas like capital markets. It’s important to reiterate that things like interest rate shifts and federal fiscal policy can drive short-term market volatility in the months and year ahead, our portfolios are managed with a long-term outlook. We don’t chase trends, but rather we focus on helping your employees reach their investment goals. 2025 updates This year's portfolio updates, while much smaller in scope and scale than last year's, are no less important. Let’s take a closer look: Core Value Tilt All three SRI portfolios Innovative Technology Here's what's changing: More U.S. exposure While we don't advise going all-in on American markets, the forecasted risk-adjusted return for the U.S. remains strong in the long run (think: decades) relative to international markets. So similar to last year’s portfolio updates, we’re dialing down the international exposure for most portfolios. Those portfolios will see: Small increases in U.S. stock and bond allocations Small decreases in international emerging market stocks and bonds Small decreases in international developed market bonds More short-term corporate bonds The biggest change this year will be felt by portfolios with larger bond allocations. We expect U.S. short-term, high-grade corporate bonds to offer higher yields without undue increases in long-term risk, so we’re increasing the exposure to them while decreasing the weight of short-term U.S. Treasuries. The yields on these types of treasury bonds, which mature in a year or less, tend to fall right along with interest rates, and a lower interest rate environment is still expected in the long run. New innovation ETF Separately, we’re diversifying the Innovative Technology portfolio by adding a new actively-managed fund. This new ETF builds on themes like AI and biotech while adding more exposure to large-cap stocks and the Information Technology sector (hardware, software, etc.) as a whole. What this means for your employees The great thing about technology like ours is that it makes implementing updated portfolios simple. Our automated rebalancing will tax-efficiently transition employees’ portfolios to the new target weights over time. It’s yet another example of how we make it easy to be invested. Additional resources If you’d like to learn more about our approach to investing, you might want to check out these articles: Portfolio Construction Process: Core, Value, Innovative Technology ETF Selection Methodology SRI Methodology Innovative Technology Article and disclosures You can always review our 401(k) investment options here.