An "old-school" exchange traded fund (ETF)? Well, what that may mean is a fully transparent ETF, where the asset class is what it says it is, the portfolio is truly diversified, the base is broad and the tax efficiency is guaranteed. Jim Wiandt for Index Universe gives us five obvious ETFs that he picked from the flurry of newfangled funds:

  • Vanguard FTSE All-World-ex U.S. (VEU) This ETF covers all equities outside the U.S. by market cap. With a 0.25% expense ratio, there’s a lot rolled into one ETF.
  • iShares Russell 2000 (IWM) This is a simple index made up of small-caps in the U.S. and carries a 0.20% expense ratio.
  • Vanguard Total Stock Market (VTI) VTI follows the MSCI index and is a good, old-fashioned, broad-based, transparent and efficient diversification tool with a 0.07% expense ratio.
  • SPDR Total Market Dow Jones Wilshire 5000 (TMW) This is truly does cover the total market but there are some downsides: extreme illliquidity at the bottom of the index, and there are 6,500-7,000 equities included.
  • iShares Russell 3000 (IWV) IWV comprises the largest 3,000 stocks within the investment universe. With no re-weighting or re-balancing, it’s simple and effective.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.