Next, investors should look at the costs on broad U.S. stock funds, which tend to be the largest holding. Charles Schwab used to offer the cheapest broad index ETFs at 0.06% to 0.08% expense ratios, but last year, FocusShares, a unit of Scottrade, launched a suite of low-cost ETFs based on Morningstar’s indexing methodology, with the cheapest coming in at a 0.05% fee. Additionally, Vanguard recently lowered the costs on its S&P 500 ETF to 0.05%. [Trading Costs]
Lastly, you should still keep an eye on your portfolio and rebalance when one asset classes grows too large or small. Percent allocations are loose guidelines, but if asset classes expand five or ten percent, investors should begin to sell or shift some of the returns to underweight categories.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.