This ETF Portfolio Pays You To Hold It

October 14, 2014

For years, I’ve tracked the 'world’s lowest-cost ETF portfolio.' Now I can do one better.

For the past six years, I’ve kept track of what I call the world’s lowest-cost ETF portfolio. It’s an aggressive portfolio holding the ETFs with the lowest expense ratio in six different areas of the market:

  • 40 Percent U.S. Equities
  • 30 Percent International Developed Market Equities
  • 5 Percent Emerging Market Equities
  • 5 Percent REITs
  • 15 Percent Fixed Income
  • 5 Percent Commodities

When I started tracking the portfolio, it had a blended expense ratio of 0.16 percent per year, meaning you paid $16 per year for every $10,000 invested. I thought that was pretty cool.

ETF prices fall year after year, however, and today, that blended expense ratio is down to just 0.08 percent per year.

Here’s the portfolio:

The World's Lowest-Cost ETF Portfolio
Asset Class Weight Fund Ticker Expense
U.S. Equity 40% Schwab U.S. Broad Equity ETF SCHB 0.04%
Developed Markets Equity 30% Schwab International Equity ETF SCHF 0.08%
Emerging Markets Equity 5% Schwab Emerging Markets Equity SCHE 0.14%
Fixed Income 15% Schwab U.S. Aggregate Bond SCHZ 0.05%
REITs 5% Schwab U.S. REIT ETF SCHH 0.07%
Commodities 5% UBS E-TRACS DJ-UBS Commodity TR ETN DJCI 0.50%
Blended Expense Ratio 0.08%

For just $8 a year, you get exposure to more than 4,000 stocks, 1,500 bonds, 25 commodities, 45 different countries and a dozen difference currencies. That’s awesome.

But what if I told you that you could do one better? What if you could actually build a portfolio that paid you 0.05 percent a year to hold it?


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