An exchange traded fund (ETF) portfolio with a total expense ratio of 0.15%?
While such a dream might seem to good to be true, it’s real, and it’s practically a steal. Matt Hougan for Index Universe created an ETF portfolio that can be purchased for 0.148%, which is 16 basis points less than what it was in late June. The drop is partly caused by the release of the Vanguard Europe Pacific ETF (VEA). Its release caused the MSCI EAFE index access cost to drop from 0.35% down to 0.15%.
Hougan created the index to keep track of the ETF industry as a whole. It follows a sample allocation that might fit a young, aggressive investor with lots of time on hand. The fact that a balanced, well-diversified portfolio is available for this cheap exemplifies one of ETFs’ biggest benefit: low costs. The portfolio is heavy in Vanguard and that’s because Vanguard has tried to establish itself as the leader in low-fee ETFs. That’s not to say that low fees are always the most important thing to look for when ETF shopping. An ETF has to have an overall "right fit" for the investor, but a cheap price tag never hurts!
|
Asset Class |
Weight | Fund | Ticker | ER |
| U.S. Stocks | 40% | Vanguard Total Market | VTI | 0.07% |
| Ex-U.S., Developed | 30% | Vanguard Europe Pacific | VEA | 0.15% |
| Emerging Markets | 5% |