Mindy Yu, CIMA®

2025 portfolio updates: What financial advisors need to know Jan 21, 2025 12:05:59 PM Updates to Core, Value Tilt, SRI, and Innovative Tech are coming soon. As part of Betterment’s investment oversight, our Investing team regularly reviews and updates our portfolio strategies to align with changing market conditions. For 2025, we are implementing strategic adjustments across multiple portfolios that are guided by updated capital market assumptions and asset class expectations. These are the portfolios that will be impacted: Core portfolio Value Tilt portfolio Innovative Technology portfolio Socially Responsible Investing portfolios (Broad, Social, and Climate Impact) Key changes for 2025 Equities: We are modestly increasing our exposure to the U.S., while reducing exposure to emerging markets, for nearly all portfolios. Fixed Income: 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. Innovative Technology portfolio: 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. More information is available in the Innovative Tech portfolio disclosure. What this means for your clients We plan to update allocations for newly funded portfolios starting in February 2025. For existing goals, our automated rebalancing feature will transition client portfolios to the new target portfolio weights—using clients’ dividends, deposits, and withdrawals and sell/buy rebalancing to manage the transition tax-efficiently. Rebalancing will respect any gains allowance, or other rebalancing settings that you’ve set for your clients’ goals. You can log into the Advisor Dashboard to review and update your client gains allowances, or disable system rebalancing if you prefer to rely on only cash flows to reduce drift in your client accounts. These settings adjustments should be in place by early February to ensure that adjustments are in effect before portfolio updates are made. Additional resources If you’d like to learn more about our approach to investing, you can check out these articles: Portfolio Construction Process: Core, Value, Innovative Technology ETF Selection Methodology SRI Methodology Innovative Technology Article and disclosures