Betterment Partners with BlackRock and Goldman Sachs Asset Management

By Daniel Lanyon on Thursday 14 September 2017

Alternative LendingSavings and Investment

The partnership will expand portfolio options aimed at increased personalisation.

Betterment, the largest independent online investment advisor, will offer two new portfolio strategies including an income portfolio strategy from BlackRock and a smart beta portfolio strategy from Goldman Sachs Asset Management.

The first in a new breed of ‘robo advisors’’ – or online wealth managers – Betterment looks after more than $10bn in assets for more than 270,000 customers.

“Betterment has an increasingly diverse customer base; they all want to put their money to work, but not necessarily in the same way,” said Jon Stein, Founder and CEO of Betterment. “Adding these options to our existing portfolio strategies will help us deliver on our promise to provide customers with a personalised investment plan tailored for their individual needs and preferences.”

 Betterment says it selected BlackRock’s income portfolio because “it was created for clients averse to stock market risk, but who want to target higher levels of income than cash savings accounts deliver.”

The portfolio invests 100 per cent of assets in U.S. bonds and international bonds issued in U.S. dollars. The portfolio strategy prioritizes capital preservation and generating cash income.

“Our customers continue to seek out strategies that can turn their investments into a steady income,” said Alex Benke, CFP®, VP of Financial Advice and Investing at Betterment. “We’re excited to be partnering with BlackRock to provide this new portfolio, and believe that a significant portion of our growing customer base may gain peace of mind by targeting a steady stream of income, while minimizing the risk of losing principal.

Betterment selected GSAM’s smart beta strategy uses traditional passive funds as well as the portfolios GSAM’s in proprietary performance-seeking ActiveBetaTM equity ETFs. They seek to deliver stronger risk-adjusted returns relative to traditional market-weighted index products. The ActiveBetaTM strategy has strong value, momentum, high quality and low volatility criteria.

This GSAM portfolio strategy tends to be more heavily allocated to emerging markets, as well as small-cap stocks in both the U.S. and developed countries. The strategy also incorporates REITs and proportionally invests more in high-yield bonds with longer durations, compared to Betterment’s core portfolio strategy.

“Individuals managing their investments through Betterment can now easily tap into GSAM’s investing and risk-management expertise at a low cost,” Benke said. “We’re thrilled to partner with Goldman Sachs Asset Management by offering this new smart beta portfolio to those in our large customer base looking for a thoughtful and deliberate approach to helping achieve better risk-adjusted returns."


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