Betterment has joined its major Robo Advisor competitor Wealthfront in doing a 360 on the use of "smart beta" in its portfolio,
From their website in an article published in June of 2015
Market Capitalization: Still the Anchor
Here is their list of ETFs used in their" simple" portfolios using market cap weighted ETFs
An article on their website from 2016 entitled How Active is Your ETF Index I
A new breed of ETFs is similar in name only to passive ETFs, but instead exhibits the characteristics of a traditional actively managed portfolio—particularly in fees and turnover, and for less than certain higher returns.
Examples are inverse (or “short”), leveraged, and smart-beta ETFs. Smart-beta funds may only confuse rather than help most investors.
According to a Wall Street Journal report, smart beta funds’ stocks are weighted “by rules or ‘factors’ other than their market value, such as their dividends, value or low volatility.”
While proponents say that these funds can outpace a straight index over extended periods—say, a full market cycle or two, “don’t expect outperformance every year,” said the report.
In fact, according to ETF.com, “Actively managed ETFs by design are expected to deliver outperformance, but they often underperform their benchmarks.”
Investors should also be aware that smart-beta ETFs rely on the actions of fund managers who dictate the actual execution of the fund’s investment strategies
That atttitude towards smart beta at Betterment was then...this is now:
That's a alot to absorb for the Betterment customer who was marketed a service that was supposed to simplify their investing (and the explanation of smart beta is likely to make the eyes of everyone but a finance geek glaze over ,...and those people are likely self directed investors in any case..
I am totally biased of course but I would argue that incorporating "smart beta " in a portfolio is a decision best made by a dedicated do it yourselfer or someone working with a personal advisor that doesn't present only two choices "smart beta" and "non smart beta" portfolio which ultimately is one (actually one of two) size fits all and can clearly explain the strategy.