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How do the SRI strategies compare to Betterment's Core Portfolio Strategy?

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We can draw comparisons between the Betterment Core Portfolio and the three different socially responsible investing options.

Betterment Broad Impact vs Betterment Core

When compared to Betterment’s Core portfolio, there are three main changes:

  1. US stock exposure is replaced with a broad US ESG stock market ETF (ESGU) and a shareholder engagement focused US stock market ETF (VOTE). Two other broad US ESG stock market ETFs (ESGV and SUSA) serve as the alternative tickers for ESGU for Tax-Loss Harvesting+ (TLH+).
  2. Emerging Market and Developed Market stock exposure are replaced with a broad ESG Emerging Market fund (ESGE) and a broad ESG Developed Market fund (ESGD), respectively. Because of limited liquidity among other Emerging Market and Developed Market SRI funds, non-ESG market-capitalization based funds are used as alternative tickers for TLH+.
  3. For tax-deferred portfolios only, we replace our current US High Quality Bond exposure with an ESG US High Quality Bond fund (EAGG) and an ESG US Corporate Bond fund (SUSC).

To maintain our requirements for geographic and asset class diversification, lower cost, and higher liquidity, this portfolio contains some funds that do not have SRI mandates. To learn more about the comparison of the Broad Impact and Betterment Core portfolios, review our full SRI portfolio methodology.

Betterment Climate Impact vs Betterment Core

When compared to Betterment’s Core portfolio, there are three main changes:

  1. 50% of our Total Stock exposure is replaced with an allocation to a broad global low-carbon stock ETF (CRBN). Currently, there are no viable alternative tickers for this asset class, so this component of the portfolio cannot be tax-loss harvested.
  2. The remaining 50% of our International Stock exposure, and 40% of our Core portfolio’s US Total Stock Market exposure is allocated to three broad region-specific stock ETFs which screen out companies that hold fossil-fuel reserves: US Total Stock Market exposure is replaced by SPYX, International Developed Stock Market exposure is replaced by EFAX, and Emerging Markets Stock Market exposure is replaced by EEMX.
  3. 10% of our US Total Stock Market exposure is replaced with an allocation to a fund focused on engaging with companies to improve their corporate decision-making on sustainability and social issues (VOTE). Currently, there are no viable alternative tickers for this asset class, so this component of the portfolio cannot be tax-loss harvested.
  4. US High Quality Bond and International Developed Market Bond exposures are replaced with a global green bond ETF (BGRN).

For diversification purposes, some bond ETFs in the Betterment Climate Impact strategy are still non-climate focused, either because the corresponding alternatives do not exist or they lack sufficient liquidity. To learn more about the comparison of the Climate Impact and Betterment Core portfolios, review our full SRI portfolio methodology.

Betterment Social Impact vs Betterment Core

The Social Impact portfolio builds off of the ESG exposure from funds used in the Broad Impact portfolio and makes the following additional changes:

  1. We replace 10% of our US Total Stock Market exposure with an allocation to NACP.
  2. We replace an additional 10% of our US Total Stock Market exposure with an allocation to SHE.

Currently, there are not any viable alternative tickers for NACP or SHE, so these components of the portfolio cannot be tax-loss harvested. To learn more about the comparison of the Social Impact and Betterment Core portfolios, review our full SRI portfolio methodology.