Portfolios

2025 portfolio updates: What plan sponsors need to know 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.

2026 portfolio updates: What plan sponsors need to know Updates to the Betterment managed strategies are coming soon. Market volatility and lessons for the year ahead From a new U.S. administration and rising geopolitical tensions to interest rate cuts and questions around AI, 2025 was a year that kept investors on alert. Meanwhile, the longest government shutdown in U.S. history added further uncertainty. Despite the volatility and uncertainty, diversification proved its value once again. Staying diversified across asset classes helped portfolios remain resilient, one of the cornerstones of Betterment’s investment philosophy. How diversification supported long-term performance 90% stocks/10% bonds tax-advantaged portfolio, annual net of fees returns as of September 30, 2025. While no one can predict what 2026 will bring, we remain focused on our long-term, disciplined investment process. Our portfolios are built to weather short-term volatility and support steady progress toward employees’ retirement goals. Betterment’s disciplined portfolio management process As your 3(38) investment fiduciary, Betterment regularly reviews and updates our portfolio strategies to align with evolving market conditions. Each year, we refresh our assumptions for expected returns, volatilities, and correlations across asset classes. We also evaluate underlying funds for cost efficiency and diversification benefits. Using these updated inputs, we simulate thousands of potential market paths to identify the optimal mix of assets that maximizes expected returns for a given level of risk. This rigorous process ensures our portfolios are designed for the long run, not short-term trends. 2026 portfolio updates for Betterment portfolios For 2026, we’re implementing strategic updates across several Betterment-managed portfolios, including: Core Innovative Technology Value Tilt All Socially Responsible Investing (SRI) portfolios: Broad, Social, and Climate Impact Flexible portfolio Expanding access to the bond market We’re adding an actively managed core bond fund to our non-SRI strategies, broadening exposure across the global bond market. Passive strategies tend to focus on U.S. Treasuries, and overlook other parts of the bond market. As market conditions shift and interest rates decline, active management can open up more opportunities to access other bonds in the broader market, such as securitized products or high-yield bonds which may offer greater total return potential. This new option will also be available within the Flexible portfolio to give build-it-yourself investors greater customization. Fine-tuning U.S. exposure Within our U.S. stock allocations, we’re slightly reducing mid-cap exposure and reallocating toward large-cap stocks to better align with benchmarks while maintaining strong diversification. Beyond these tweaks, some risk levels of our portfolios (including all three of our SRI portfolios) may see minor adjustments to our short-term bond allocations, where we’re slightly increasing exposure to short-term Treasuries. This helps smooth out the glide path for employees using our auto-adjust feature, de-risking them as they near retirement. What these changes mean for your employees’ portfolios Betterment’s technology makes these updates seamless. Automated rebalancing will transition employees’ portfolios to the new target allocations over time without the need to lift a finger. It’s another example of how Betterment combines fiduciary oversight, disciplined portfolio management, and smart automation to make it easy to be invested. Learn more about Betterment’s investment approach 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 You can always review our 401(k) investment options here.