Comments on: 8 Lazy ETF Portfolios

By: Mike

Mike — Tue, 23 Mar 2010 00:05:34 +0000

Hi Capt. Mike.

In my opinion, there are two primary reasons to consider investing in index funds rather than ETFs, despite their (often) higher expense ratios.

First, index funds don’t (usually) come with a commission to buy or sell, whereas ETFs (usually) do.

Second, pretty much every brokerage firm will allow for automatic monthly/quarterly buys or sells of a mutual fund, whereas only a handful will allow that with an ETF.

In short, the more frequently you’re making purchases (or sales) and the smaller the amount you’re investing, the more sense index funds make as compared to ETFs.

By: Capt. Mike

Capt. Mike — Mon, 22 Mar 2010 23:25:55 +0000

Hi Mike,
I have confused myself again…if the expense ratios are so much lower on the ETF funds than comparable Index Funds, why would you ever buy or invest an Index Fund?
Kind regards, Capt. Mike

By: JoeTaxpayer

JoeTaxpayer — Sat, 06 Feb 2010 03:36:31 +0000

As always, an interesting post.
Harry Browne – Intriguing, so low on stock, and that Gold is scary. I wonder what he recommends for reallocating. More than anything, I wonder how it backtests over the last few decades.

By: nicholas perry

nicholas perry — Mon, 18 Jan 2010 19:33:54 +0000

25% schwab emerging markets etf
25% schwab us broad market etf
25% schwab us large cap etf
25% schwab international equity etf

By: Mike

Mike — Thu, 14 Jan 2010 13:55:09 +0000

cb, that’s a great question.

My suspicion is that it’s simply a matter of reducing complexity by reducing the number of funds.

As to mid-caps’ performance over the last decade, I’d say it’s simply an example that “actual returns rarely equal expected returns.” Theoretically at least, mid-caps’ risk and expected return should (naturally) be right between that of large-caps and small-caps.

On the other hand, it wouldn’t seem entirely unreasonable to suspect that there’s at least a little advantage to be gained from mid-caps’ relative unpopularity (due to people picking up large and small and ignoring what’s in the middle). Lack of demand leads to lower prices and higher future returns.

By: cb

cb — Thu, 14 Jan 2010 09:04:34 +0000

I’m totally new to this. But I’m curious why no one has Mid-Cap index funds in their portfolios? I saw this article at Morningstar suggesting that Mid-Cap funds may be a better mode of diversification:

http://news.morningstar.com/classroom2/course.asp?docId=2996&page=1&CN=com

It only looks at the period from 1979 to 1998. But looking around a bit myself, Vanguard’s Mid-Cap index (VIMSX) and the S&P 500 MidCap 400 Index seem to do better than small cap indexes and the S&P 500 from 1998 to 2010 also. So that bodes well for mid-cap indices from 1979 to the present.

By: Wendell

Wendell — Tue, 27 Oct 2009 14:56:35 +0000

I’m considering something like the Ivy League portfolio, but have already learned that he has changed his mix to 10% emerging mkts and 15% REIT. If I allocate along the lines of the Ivy Portfolio, what source would I use to find out when he changes his allocation mix?

By: Nathan

Nathan — Fri, 16 Oct 2009 20:46:21 +0000

Swedroe is fixaed on commodities which I don’t understand. If you want commodity exposure, an emerging markets fund will give you plenty of exposure. You will not only get exposure to the commodity itself, but to the value added result created in the end product. For instance, VWO is very heavily dependent on commodity prices.

By: Mike

Mike — Thu, 24 Sep 2009 01:32:02 +0000

FP Hawks: Yes, from what I’ve seen Larry does often recommend TIPS and commodities. The portfolio above (or rather, the asset allocation of the portfolio above) was put forth in his Wise Investing Made Simple.

I’m sure he’d recommend different portfolios for different scenarios. His own portfolio, for instance, looks quite different according to what I’ve read on the Boglehead forums.

By: FP Hawks

FP Hawks — Thu, 24 Sep 2009 01:27:00 +0000

I thought Larry Swedroe was a big fan of TIPS and commodity exposure.

ETF examples:
iShares Barclays TIPS Bond (TIP)
PowerShares DB Commodity Index Tracking (DBC)