What is in Betterment's Core portfolio?

A globally diversified, value-tilted mix of stock and bond ETFs — US, developed, and emerging-market stocks tilted toward value, plus US and international bonds. The exact weights depend on your chosen stock-to-bond level; this page tests a representative ~90/10 version.

Is Betterment worth it?

Betterment charges roughly 0.25% per year for automation, rebalancing, and tax-loss harvesting. The underlying portfolio is inexpensive ETFs you could hold yourself, so the value is convenience versus a fee that compounds over decades.

Does Betterment beat the S&P 500?

Betterment is more diversified and tilts toward value, which is designed to help over the long run — but during the recent US growth-led bull market it has generally lagged the S&P 500. Its edge is diversification and lower single-market risk, not necessarily higher recent returns.

What's really inside Betterment's portfolio — and does it beat the S&P 500?

By Jeffrey Lin · Published 2026-08-29 · Updated 2026-08-29

Betterment's Core portfolio looks effortless on the surface — one slider from conservative to aggressive — but underneath sits a globally diversified, value-tilted basket of index funds. This page rebuilds a representative version of the roughly 90%-stock allocation (the real one is personalized and adjusted over time) and tests whether its tilts toward value and international stocks earned their keep against a plain S&P 500 fund.

From Jul 2000 to Jul 2026, a quarterly-rebalanced Betterment Core portfolio returned 7.6% per year with a maximum drawdown of -50.2% — versus 8.4% and -50.8% for S&P 500 (SPY) alone. It gave up some return for materially lower risk, producing a higher Sharpe ratio (0.58 vs 0.61). $10,000 grew to $67,438 (vs $81,659 in the S&P 500).

What's in it: the allocation

VTI30.9%
VEA24.6%
EEM14%
VTV14.9%
IJS5.7%
BND5.2%
BNDX2.9%
TIP1.2%
BIL0.6%

Growth of $10,000

Growth of a $10,000 investment, Jul 2000–Jul 2026. The Betterment Core line rises more slowly than the S&P 500 but with visibly shallower dips — the trade-off the strategy is designed to make.

What an investor actually experiences: drawdowns

Decline from the prior peak — the "underwater" curve.

At roughly 90% stocks, the Betterment-style portfolio is built for growth, not protection — and its drawdown looks the part: a -50.2% fall at its worst, essentially matching the S&P 500's -50.8%. It also stayed underwater a long time, as long as 61 months. The value and international tilts changed which stocks it held, but not the fact that it halved in a severe bear market.

A decline this deep is the kind that ends investing plans. If you needed this money for a house, a child's education, or retirement during one of those years, you could have been forced to sell near the bottom. This is a portfolio for money you can leave alone for a decade or more — not for near-term goals.

Results

Statistic	S&P 500 (SPY)	Betterment Core
CAGR	8.4%	7.6%
Annualized volatility	15.1%	14.4%
Sharpe ratio	0.61	0.58
Sortino ratio	0.91	0.86
Max drawdown	-50.8%	-50.2%
Longest drawdown (months)	74	61
Growth of $10,000	$81,659	$67,438

The portfolio grew at 7.6% a year, turning $10,000 into $67,438 over about 26 years — a little behind the S&P 500's $81,659, as its value tilt and non-US stocks lagged the US market over this period.

Here the diversification came at a small cost rather than a benefit: the Sharpe ratio was 0.58 against the S&P's 0.61, and Sortino 0.86 versus 0.91, with nearly identical volatility. Over this window you took on about the same risk as a plain S&P 500 fund for slightly less return — and paid roughly 0.25% a year in advisory fees on top. Its case rests on the value and small-cap tilts eventually paying off, plus the convenience of automation.

Figures are computed from monthly adjusted closing prices over Jul 2000–Jul 2026. Drawdowns are measured at month-end and so understate intra-month extremes.

Methodology

The two instruments

VTI — Vanguard Total Stock Market ETF: The entire US stock market — the core growth holding.
VEA — Vanguard FTSE Developed Markets ETF: Stocks of developed markets outside the US, for global diversification.
EEM — iShares MSCI Emerging Markets ETF: Emerging-market stocks — higher growth potential with higher volatility.
VTV — Vanguard Value ETF: Cheaper, established US companies. This 'value' tilt is central to Betterment's design and has historically added return over the very long run (here it also stands in for a mid-cap value fund).
IJS — iShares S&P Small-Cap 600 Value ETF: Small, cheap US companies — the small-cap value tilt, higher potential return with more bumps.
BND — Vanguard Total Bond Market ETF: Broad investment-grade US bonds — the main stabilizer (also standing in for a slice of emerging-market bonds).
BNDX — Vanguard Total International Bond ETF: Bonds from outside the US, currency-hedged, for further diversification.
TIP — iShares TIPS Bond ETF: US inflation-protected Treasuries, a small hedge against rising prices.
BIL — SPDR 1-3 Month T-Bill ETF: Cash-like short-term Treasury bills.

Backtest parameters

Allocation: 30.9% VTI / 24.6% VEA / 14% EEM / 14.9% VTV / 5.7% IJS / 5.2% BND / 2.9% BNDX / 1.2% TIP / 0.6% BIL
Benchmark: S&P 500 (SPY)
Data: Monthly adjusted closing prices (dividends reinvested)
Period: Jul 2000 – Jul 2026 (history before an ETF's inception is extended with its older index/mutual-fund equivalent)
Rebalance: Quarterly, at month-end
Transaction costs: None modelled

Advantages

Global diversification with a value tilt: Betterment spreads money worldwide and leans toward cheaper 'value' stocks — a factor that academic research has linked to higher long-run returns, and that a plain S&P 500 fund does not target.
Automatic management: Rebalancing and (in taxable accounts) tax-loss harvesting run on autopilot, and the tiny bond slice nudges the risk down slightly from an all-stock portfolio.
Low-cost, broadly diversified building blocks: The portfolio is built from thousands of stocks and bonds through cheap index ETFs, removing single-company and single-country risk.

Disadvantages and risks

An advisory fee on top of fund costs: Robo-advisors typically charge about 0.25% per year. Because the holdings are ordinary low-cost ETFs, a do-it-yourself investor can build the same portfolio and avoid the fee entirely.
The value and international tilts have lagged: For much of the past 15 years, value stocks and non-US stocks trailed the US growth-led market — so this tilted, global portfolio has underperformed a simple S&P 500 fund over that period.
Aggressive by design: At roughly 90% stocks, the Core portfolio is built for growth, not safety: expect large declines in a bear market, only lightly cushioned by the small bond slice.

Try it yourself

Every number on this page is reproduced by MarketHeist's free portfolio tool — change the weights, tickers, or rebalancing and watch the result update.

Open a Betterment-style portfolio in the live tool →

Frequently asked questions

What is in Betterment's Core portfolio?: A globally diversified, value-tilted mix of stock and bond ETFs — US, developed, and emerging-market stocks tilted toward value, plus US and international bonds. The exact weights depend on your chosen stock-to-bond level; this page tests a representative ~90/10 version.
Is Betterment worth it?: Betterment charges roughly 0.25% per year for automation, rebalancing, and tax-loss harvesting. The underlying portfolio is inexpensive ETFs you could hold yourself, so the value is convenience versus a fee that compounds over decades.
Does Betterment beat the S&P 500?: Betterment is more diversified and tilts toward value, which is designed to help over the long run — but during the recent US growth-led bull market it has generally lagged the S&P 500. Its edge is diversification and lower single-market risk, not necessarily higher recent returns.

References

Educational analysis of historical data, not investment advice. Past performance does not guarantee future results. Backtested results are hypothetical and computed from the MarketHeist portfolio engine on the parameters above.