How To Build The Cheapest ETF Portfolio

November 20, 2012


Vanguard charges $7 per trade on non-Vanguard ETFs, in addition to a $20/year service fee  (note: both fees drop with higher asset levels). Schwab charges a higher commission on non-Schwab ETFs—$8.95 per trade—but no annual fee.

The cheapest overall portfolio can be found on the Schwab platform using the Schwab U.S. Broad Market ETF (SCHB | A-100), the Schwab International Equity ETF (SCHF | A-96), the Schwab Emerging Markets Equity ETF (SCHE | B-97) and the Schwab U.S. Aggregate Bond ETF (SCHZ | A-99):

Schwab Model Portfolios

The Vanguard portfolio, using VTI, VEA, VWO and the Vanguard Total Bond Market (BND | A-93 ) looks a lot like the TD Ameritrade portfolio, and is also reasonably cheap:

Vanguard Model Portfolios

In sum, it’s possible—and easy—to build a good, cheap portfolio regardless of your choice of online broker.

It’s worth noting that if you are looking for more nuanced exposure, you will need to look beyond price to determine your portfolio allocations; this analysis assumes you’re looking for a simple, cheap portfolio with diversified market exposure.

At the time this article was written, the author held positions in DBC, VTI and VWO. Contact Carolyn Hill at [email protected].



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