Robo Advisor Betterment Portfolios Are Robots Better?

robo-advisors-Betterment-portfolios

Last Updated on

This is the article displaying the portfolios by the robot advisor Betterment. Here you will find a description, performance for the portfolios as well as detailed information on how to implement it yourself.

Robo Advisor Betterment Portfolios Are Robots Better?

Betterment is probably the most well-known fintech company. It started the robo-advisor phenomenon. If you ever listened to NPR Radio or podcasts, you probably know who they are.

Betterment has 16 Billion assets under management as per 2019. Their portfolios are well diversified. They are some of the few portfolios that have emerging market bonds as an asset class.

If you want to gain a greater insight into the robo-advisory phenomenon, I recommend picking up FinTech Innovation: From Robo-Advisors to Goal-Based Investing and Gamification.

Their biggest competitor is Wealthfront.

To see a comparison of robo advisor portfolios, see our article Robo Advisor Performance. This is the article where we compare the performance of various robo advisors.

This mission is too important for me to allow you to jeopardize it.
– HAL 9000

Description of the Betterment portfolios

There seems to be a trend in the robo advisor portfolios. They are all highly diversified. That means they use asset classes not usually seen as much in other portfolios.

The Betterments portfolios include the use of emerging market bonds and many value stocks, for example, mid-cap value.

It creates a set up for potential outperformance in that they can rebalance their way to higher returns.

In circa 2014 (or maybe 2012), they changed their portfolio composition. The asset allocation that you see below is a reflection of that asset allocation. Their new asset allocation (which is not that original is also benchmarked, but we still need to document it here. That is upcoming.

Two sets of portfolios

In the 2020 portfolios, there are two sets of portfolios.

  1. The first set is the portfolios, the one with taxable in their name. They are meant to be used in a taxable account. They contain asset classes that minimize taxes, such as muni bonds.
  2. The second set is the portfolios with retirement in their name. They are meant to be used in a tax-sheltered/tax-deferred account. They contain asset classes that are not particularly tax-aware such as standard bonds fx—total bonds market, REITs, etc.

Let’s see how they perform.

Performance of the Betterment portfolios

NameAsset class countYear to dateReturn in 201910 year returnCAGR since 1989 (%)Risk levelExpense ratio
Robo Advisor Betterment 1006-11.4425.669.73%9.4530.07%
Robo Advisor Betterment 8010-8.4522.098.59%9.0130.08%
Robo Advisor Betterment 6010-5.4618.577.43%8.4320.08%
Robo Advisor Betterment 4011-2.5814.756.08%7.6210.09%
Robo Advisor Betterment 9011-10.0923.979.19%9.2930.08%
Robo Advisor Betterment 7010-7.3920.678.15%8.9220.08%
Robo Advisor Betterment 5010-4.8417.467.12%8.4720.09%
Robo Advisor Betterment 3012-2.0412.595.18%7.1910.08%
Robo Advisor Betterment 2012-0.579.723.96%6.310.07%
Robo Advisor Betterment 10120.956.832.71%5.3710.06%
Robo Advisor Betterment 022.383.981.47%4.410.05%
Robo Advisor Betterment 2020 Taxable 100% Stocks6-12.7424.418.83%8.5730.07%
Robo Advisor Betterment 2020 Taxable 90% Stocks10-11.1723.038.54%8.4730.07%
Robo Advisor Betterment 2020 Taxable 80% Stocks10-9.6921.688.23%8.3630.08%
Robo Advisor Betterment 2020 Taxable 70% Stocks10-8.0520.247.86%8.1920.08%
Robo Advisor Betterment 2020 Taxable 60% Stocks10-6.4718.887.54%8.1120.08%
Robo Advisor Betterment 2020 Taxable 50% Stocks11-4.8617.397.11%7.9420.08%
Robo Advisor Betterment 2020 Taxable 40% Stocks12-3.2815.86.59%7.710.08%
Robo Advisor Betterment 2020 Taxable 30% Stocks12-1.7713.45.62%7.1510.08%
Robo Advisor Betterment 2020 Taxable 20% Stocks12-0.2610.864.53%6.4910.07%
Robo Advisor Betterment 2020 Taxable 10% Stocks121.218.043.30%5.6910.06%
Robo Advisor Betterment 2020 Taxable 0% Stocks12.423.511.14%4.2110.05%
Robo Advisor Betterment 2020 Retirement 100% Stocks6-12.3824.648.87%8.5230.07%
Robo Advisor Betterment 2020 Retirement 90% Stocks10-11.3622.888.53%8.4230.07%
Robo Advisor Betterment 2020 Retirement 80% Stocks10-10.0721.378.21%8.2630.08%
Robo Advisor Betterment 2020 Retirement 70% Stocks10-8.6719.767.83%8.0420.08%
Robo Advisor Betterment 2020 Retirement 60% Stocks10-7.3118.237.49%7.920.08%
Robo Advisor Betterment 2020 Retirement 50% Stocks11-5.8916.67.05%7.6920.08%
Robo Advisor Betterment 2020 Retirement 40% Stocks12-4.4514.926.51%7.4210.08%
Robo Advisor Betterment 2020 Retirement 30% Stocks12-2.8512.65.55%6.8910.07%
Robo Advisor Betterment 2020 Retirement 20% Stocks12-1.210.174.47%6.2710.07%
Robo Advisor Betterment 2020 Retirement 10% Stocks120.487.513.25%5.5210.06%
Robo Advisor Betterment 2020 Retirement 0% Stocks12.423.511.14%4.2110.05%

The 0% drawdown of the 0% stocks is not an error. These portfolios have not had a down year for 30 years.

Asset Allocation of the Betterment portfolios

Robo advisor Betterment 100

  • 34.60%  US Total Stock Market   (VTI)
  • 9.20%    US Large Cap Value         (VTV)
  • 7.50%    US Mid Cap Value            (JKI)
  • 6.40%    US Small Cap Value         (VIOV)
  • 27.30%  International Developed Blend      (VEA)
  • 15.00%  Emerging Markets           (VWO)

Robo Advisor Betterment 90

  • 30.90%  US Total Stock Market   (VTI)
  • 8.20%    US Large Cap Value         (VTV)
  • 6.70%    US Mid Cap Value            (JKI)
  • 5.70%    US Small Cap Value         (VIOV)
  • 24.60%  Int. Developed Blend      (VEA)
  • 14.00%  Emerging Markets           (VWO)
  • 3.50%    Total US Bond Market    (BND)
  • 0.60%    Cash (money market fund)          (BIL)
  • 1.20%    TIPS       (VTIP)
  • 2.90%    Non-US Bonds   (BNDX)
  • 1.70%    Emerging Market Bonds (VWOB)

Robo advisor Betterment 80

  • 27.00%  US Total Stock Market   (VTI)
  • 7.20%    US Large Cap Value         (VTV)
  • 5.90%    US Mid Cap Value            (JKI)
  • 5.00%    US Small Cap Value         (VIOV)
  • 22.10%  International Developed Blend      (VEA)
  • 12.80%  Emerging Markets           (VWO)
  • 6.80%    Total US Bond Market    (BND)
  • 2.40%    TIPS       (VTIP)
  • 7.20%    Non-US Bonds   (BNDX)
  • 3.60%    Emerging Market Bonds (EMB / VWOB)

Robo Advisor Betterment 70

  • 23.40%  US Total Stock Market   (VTI)
  • 6.30%    US Large Cap Value         (VTV)
  • 5.10%    US Mid Cap Value            (JKI)
  • 4.30%    US Small Cap Value         (VIOV)
  • 19.30%  Int. Developed Blend      (VEA)
  • 11.60%  Emerging Markets           (VWO)
  • 9.80%    Total US Bond Market    (BND)
  • 3.80%    TIPS       (VTIP)
  • 10.90%  Non-US Bonds   (BNDX)
  • 5.50%    Emerging Market Bonds (VWOB)

Robo advisor Betterment 60

  • 19.80%  US Total Stock Market   (VTI)
  • 5.30%    US Large Cap Value         (VTV)
  • 4.30%    US Mid Cap Value            (JKI)
  • 3.60%    US Small Cap Value         (VIOV)
  • 16.70%  International Developed Blend      (VEA)
  • 10.30%  Emerging Markets           (VWO)
  • 12.30%  Total US Bond Market    (BND)
  • 5.00%    TIPS       (VTIP)
  • 14.70%  Non-US Bonds   (BNDX)
  • 8.00%    Emerging Market Bonds (EMB / VWOB)

Robo Advisor Betterment 50

  • 16.20%  US Total Stock Market   (VTI)
  • 4.40%    US Large Cap Value         (VTV)
  • 3.60%    US Mid Cap Value            (JKI)
  • 3.00%    US Small Cap Value         (VIOV)
  • 13.70%  Int. Developed Blend      (VEA)
  • 9.00%    Emerging Markets           (VWO)
  • 14.70%  Total US Bond Market    (BND)
  • 6.30%    TIPS       (VTIP)
  • 18.40%  Non-US Bonds   (BNDX)
  • 10.70%  Emerging Market Bonds (VWOB)

Robo advisor Betterment 40

  • 12.90%  US Total Stock Market   (VTI)
  • 3.40%    US Large Cap Value         (VTV)
  • 2.80%    US Mid Cap Value            (JKI)
  • 2.40%    US Small Cap Value         (VIOV)
  • 11.10%  International Developed Blend      (VEA)
  • 7.40%    Emerging Markets           (VWO)
  • 7.00%    Short Term Treasuries       (VGSH)
  • 15.10%  Total US Bond Market    (BND)
  • 6.60%    TIPS       (VTIP)
  • 19.50%  Non-US Bonds   (BNDX)
  • 11.80%  Emerging Market Bonds (EMB / VWOB)

Robo Advisor Betterment 30

  • 9.50%    US Total Stock Market   (VTI)
  • 2.60%    US Large Cap Value         (VTV)
  • 2.10%    US Mid Cap Value            (JKI)
  • 1.80%    US Small Cap Value         (VIOV)
  • 8.30%    Int. Developed Blend      (VEA)
  • 5.60%    Emerging Markets           (VWO)
  • 24.20%  Short Term Treasury       (VGSH)
  • 11.40%  Total US Bond Market    (BND)
  • 6.10%    Short-Term Investment-Grade   (VCSH)
  • 5.00%    TIPS       (VTIP)
  • 14.60%  Non-US Bonds   (BNDX)
  • 8.80%    Emerging Market Bonds (VWOB)

Robo Advisor Betterment 20

  • 6.30%    US Total Stock Market   (VTI)
  • 1.70%    US Large Cap Value         (VTV)
  • 1.40%    US Mid Cap Value            (JKI)
  • 1.20%    US Small Cap Value         (VIOV)
  • 5.60%    Int. Developed Blend      (VEA)
  • 3.70%    Emerging Markets           (VWO)
  • 42.80%  Short Term Treasury       (VGSH)
  • 7.60%    Total US Bond Market    (BND)
  • 10.70%  Short-Term Investment-Grade   (VCSH)
  • 3.30%    TIPS       (VTIP)
  • 9.80%    Non-US Bonds   (BNDX)
  • 5.90%    Emerging Market Bonds (VWOB)

Robo Advisor Betterment 10

  • 3.20%    US Total Stock Market   (VTI)
  • 0.90%    US Large Cap Value         (VTV)
  • 0.50%    US Mid Cap Value            (JKI)
  • 0.60%    US Small Cap Value         (VIOV)
  • 2.80%    Int. Developed Blend      (VEA)
  • 1.90%    Emerging Markets           (VWO)
  • 61.40%  Short Term Treasury       (VGSH)
  • 3.80%    Total US Bond Market    (BND)
  • 15.40%  Short-Term Investment-Grade   (VCSH)
  • 1.70%    TIPS       (VTIP)
  • 4.90%    Non-US Bonds   (BNDX)
  • 2.90%    Emerging Market Bonds (VWOB)

Robo Advisor Betterment 0 = 100% Bonds

  • 80.00%  Short Term Treasury       (VGSH)
  • 20.00%  Short-Term Investment-Grade   (VCSH)

Check the best mutual funds and ETFs here.

Resources for Betterment portfolios

Betterment youtube channel – it is more about them than you.

Betterment website – they do have a lot of info on how they construct their portfolio and about investing in general. Beware of their marketing speak.

Betterment recently launched a podcast. Find it in your favorite podcast library.

2001: A Space Odyssey on IMDB

Conclusion

Are you attracted to robo advisors?

What do you think of the Betterment portfolio?

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top