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Betterment expands 401(k) investment options with new mutual fund lineup

Betterment now offers mutual funds alongside ETFs and advisor-managed options, giving 401(k) sponsors more flexibility and fiduciary oversight for participants.

By Mindy Yu, CIMA®

Director of Investing, Betterment |

Published Oct. 24, 2025

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.

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.