| An
ETF Cheat Sheet for Major Domestic Stock Categories
By John Spence
January 14, 2002 |
|
Exchange-traded funds (ETFs)
make great tools for building a a reasonably diversified portfolio
of U.S. stocks on the cheap, particularly for those making lump
sum investments. However, with 102 domestic ETFs trading at last
count, some investors may feel overwhelmed by all the options.
So let's sort things out a little by grouping the funds for each
major domestic asset class. But before we do that, let's see what
the typical mutual fund charges in expenses for each category.
| Category |
Expense Ratio* |
| Large Blend |
1.23% |
| Large Growth |
1.46% |
| Large Value |
1.41% |
| Mid-Cap Blend |
1.41% |
| Mid-Cap Growth |
1.53% |
| Mid-Cap Value |
1.44% |
| Small Blend |
1.44% |
| Small Growth |
1.61% |
| Small Value |
1.51% |
*average fund expense ratio, Morningstar
In most cases, there are several ETF options covering an asset
class. A good rule to keep in mind is that for the most part an
ETF is only as good as the index it tracks. Each index provider
has its own rules for classifying size and style, and it's a good
idea to understand how the index works first. The major index
providers explain the methodology behind their benchmarks on their
websites.
| Large-Cap Blend |
| ETF name |
Ticker |
Expense ratio |
Benchmark |
| |
SPY |
0.12% |
S&P 500 |
| |
IVV |
0.09% |
S&P 500 |
| |
FFF |
0.20% |
Fortune 500 |
| |
DIA |
0.18% |
DJ Industrial
Av. |
| |
IWB |
0.15% |
Russell 1000 |
| Mid-Cap Value |
| ETF name |
Ticker |
Expense ratio |
Benchmark |
| |
IWS |
0.25% |
Russell Midcap
Value |
| |
IJJ |
0.25% |
S&P MidCap
400/Barra Value |
Finally, for those who want to keep it really simple and hold fewer
funds, here's a list of ETFs tied to broad indexes that cover large
slices of the market. Barclays Global Investors also offers iShares
based on style indexes for the total market (Russell 3000), as shown
below.
Well, there it is: a Cliff's Notes of ETFs for the major
domestic stock categories in our style-box dominated world. Just
remember, this list doesn't include stock sector funds, bond funds,
international funds, REIT funds, and other investment categories
that could be included in a diversified portfolio. For most categories,
there are ETFs available or there will be soon. To check out the
full range of existing exchange-traded funds, take advantage of
our ETF
Screener.
