Dynamic Asset Allocation Model Favors U.S. ETFs

MAPs fixed income exposure includes an allocation to the Vanguard Short-Term Bond ETF (NYSEArca: BSV). The strategy favors BSV because the ETF has a low duration, making it less sensitive to interest rate changes. BSV’s annual fee of just 0.1% make it less expensive than 88.5% of rival funds.

The strategy’s international allocations include the aforementioned IEFA and the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG), which replaced the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI EAFE ETF (NYSEArca: EFA) last year.

IEFA charges just 0.14% per year compared to 0.33% on EFA while IEMG helps the S&P strategy maintain exposure to South Korea, a trait not featured in VWO.

iShares Core MSCI EAFE ETF

 

Tom Lydon’s clients own shares of EFA.