Embark Portfolio Holdings
When you open an account with Embark, an initial portfolio allocation is recommended based on your selected personal goal type.
Each portfolio or model is comprised solely of exchange-traded funds (ETFs). There are currently approximately 30 ETFs that are across our universe of 6 Embark model portfolios. Embark uses ETFs in our portfolios because they offer investors one or more benefits, such as access to specific asset classes, diversification, lower expense ratios, intraday liquidity, and tax efficiency compared to most actively managed mutual funds.
How are the ETFs selected?
Embark follows the Endowment Investment Philosophy® (“EIP”), which expands the investment portfolio beyond stocks and bonds to include liquid alternative assets, seeking to provide improved risk-adjusted returns over a portfolio containing solely stocks and bonds. The EIP targets equities for offense (growth), fixed income for defense (stability/income), and alternatives as special teams (risk-managed).
Embark’s selects most of the ETFs for our three-dimensional models based on the constituents in the Endowment Index® calculated by Nasdaq OMX®. The Endowment Index® seeks to track the performance of the average U.S. endowment by using ETFs to mirror the allocation data collected from over 700 college and university endowments, which collectively manage over $820 billion. ETF Model Solutions, LLC, adviser to Embark, is a creator of the Endowment Index®. For each asset class or sub-asset class in the Index, an ETF that represents that asset class. Embark incorporates most of the same ETFs from the Index to create our 3-dimensional portfolios.
Inclusion in the Endowment Index is a primary factor Embark considers when constructing our models. Embark also weighs other factors, including ETFs that optimize the ability to invest in a targeted asset class, the performance and correlation between the ETF and the targeted asset class, the quality of the ETF provider, capitalization, trading volume, and other considerations.
Do all portfolios contain holdings from the Endowment Index?
Not all of our recommended portfolios contain all the holdings of the Endowment Index®. Our Kayak (Bonds only) portfolio may be recommended for shorter-term goals, such as a Safety Net. Speed Boat (Stocks only) is generally recommended for longer term investment horizons, such as retirement.
Embark’s four 3D portfolios (Sailboat, Ferry, Yacht, Cruise Ship) include many of the ETF holdings in the Endowment Index®, albeit often in different weightings, depending on each respective portfolio and its corresponding goals.
Can more than one ETF represent a particular asset class?
The primary security in each of our model portfolios is the targeted ETF Embark selects to represent a particular asset class. When circumstances prohibit use of the primary security, Betterment’s algorithm will seek to use an alternate security. Examples of when Betterment’s algorithm will default to a substitute security is to avoid a wash-sale restriction, or to implement tax loss harvesting. Embark provides Betterment with a list of alternate securities to represent some, but not all, asset classes in our model portfolios. In instances where there are several suitable ETFs available for a particular asset class (domestic equities, for example), Embark may provide Betterment with as many as two alternates for any individual asset class, provided those substitutes are suitable and meet our selection criteria. Not all asset classes will have alternate ETFs.
Have questions?
If you have any questions about holdings in your account or one of our models, or perhaps have another question about our services, you can contact us directly at 920.785.6012 or email us at [email protected]. Betterment maintains a support line you can also call for help with navigation, linking your accounts or other site functionality. You can call the Betterment for Advisers support line at 800.400.1571.
Last updated January 9, 2023
Disclosures: Content contained herein is presented is for informational and educational purposes only and is not intended as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies, nor shall it be construed to be the provision of individualized investment, tax, or legal advice.
Embark is a digital investment service advised by ETF Model Solutions, LLC. Investments recommended by Embark involve risk and will fluctuate in value. Unless otherwise stated, investments are not insured or guaranteed. May lose money. Embark utilizes the platform and technology services of Betterment LLC, an SEC Registered Investment Adviser. Betterment provides the wrap fee program that assists us in providing our services to you. Custody and trading services for the program are provided by Betterment Securities, an SEC registered broker-dealer and member FINRA/SIPC.
Embark’s services are specific to the investment goals that you identify. We do not provide comprehensive financial or tax planning. Our Advisory services rely upon an algorithm designed and maintained by Betterment to assist us in determining our portfolio recommendations. Unless you directly consult with Embark Advisory personnel, the algorithm is the sole basis of the advice. You should not rely solely on the Betterment advice algorithm’s recommendation to make your investment decisions. Embark strongly advises all Clients to speak directly with an Embark IAR prior to making any investment decisions.
All tools and content on the Betterment, LLC website, are designed, created, and maintained by Betterment. Certain functionality, tax-coordinated portfolios and links to investment philosophy, research, educational materials, and FAQs apply solely to betterment’s 2-dimensional portfolios and may not apply to Embark’s 3-dimensional investment recommendations.
Existing Embark clients are reminded to login and update personal information whenever their goals or personal financial circumstances change. Clients should also confirm that their current goal allocation is aligned with the recommended target allocation provided for each goal. Clients with questions regarding their account, personal financial circumstances, goals, or an investment allocation with respect to our service should contact us via email or telephone.
Prospective clients contemplating opening an account with Embark are advised to read Embark’s Form ADV Brochure, Part 2A for important disclosures about our services, business practices, the costs, and risks of investing, and other important considerations prior to opening their account. You can access the most recent version of our Form ADV via a link on our website.
ETF Model Solutions, LLC. is registered as an investment adviser with the SEC. Registration does not imply a certain level of skill or training. If you have any questions about our professional services, please call us at 920.785.6012 or email [email protected]