As many of you know, I've been keeping track of just how low you can drive your expense ratio on a broadly diversified portfolio of ETFs. I published my first blog about this in June, when my portfolio of low-cost ETFs had a blended expense ratio of 16 basis points (0.16%). That fee dropped to 15 basis points (0.15%) in July, as expense ratios came down on certain funds. The Wall Street Journal was kind enough to cover that portfolio in October.
Now, the portfolio has gotten even cheaper—down to 13.65 basis points—thanks to fee reductions on three Vanguard ETFs. Vanguard recently announced that it was lowering the expense ratio on its Emerging Markets ETF (VWO) from 0.30% to 0.25% and the expense ratios on its Europe (VGK) and Pacific (VPL) ETFs from 0.18% to 0.12%. With those changes, the portfolio now looks like this:
|
Asset Class |
Weight |
Fund |
Ticker |
ER |
|
U.S. Stocks |
40% |
Vanguard Total Market |
VTI |
0.07% |
|
European Stocks |
20% |
Vanguard Europe |
VGK |
0.12% |
|
Asian Stocks |
10% |
Vanguard Pacific |
VPL |
0.12% |
|
Emerging Markets |
5% |
Vanguard Emerging Markets |
VWO |
0.25% |
|
Fixed Income |
15% |
Vanguard Total Bond Market |
BND |
0.11% |
|
REITs |
5% |
Vanguard REIT |
VNQ |
0.12% |
|
Commodities |
5% |
iPath Dow Jones AIG Commodity ETN |
DJP |
0.75% |
|
Blended Expense Ratio |
0.1365% |
|||
I'm not recommending this as the right portfolio for anyone, and I'm not saying that these are the best ETFs in their respective asset classes (although many of them are). But the portfolio makes an important point: You can now buy a diversified portfolio that includes everything from Emerging Markets stocks to commodities futures ... for 13.65 basis points. That's amazing. And it is a testament to the benefits ETFs bring to investors.
