My spouse and I decided to convert one of our IRAs to a portfolio of index-based exchange traded funds (ETFs). We looked primarily at Vanguard and iShares index-based ETFs. We put together a list of candidate ETFs by asset class.
Both family of funds have relatively low expense ratios, with Vanguard being the lowest. Except for two micro cap ETFs, we eliminated any ETFs that had an expense ratio higher than 50 basis points (0.50%). We also built a worksheet to help allocate funds among the various asset classes. You can see the results of this research and the ETF worksheet in a Google spreadsheet or the original Excel spreadsheet.
EFT’s do indeed have rock-bottom expense ratios which in most cases justifies having to pay a commission to buy or sell them.
The American Association of Individual Investors (AAII) publishes a guide to EFT’s each year in their magazine.
The latest EFT guide explains EFT’s, describes available EFT by asset class, and explains how to implement a portfolio using EFT’s. Scenarios from simple to complex portfolios are suggested.
It’s a concise article on EFT’s.