| Editors' Picks - US Total Market
By IndexFunds.com Staff
April 17, 2002 |
|
We believe it is self-evident that portfolios should start with
the domestic total market fund for that portion of the portfolio
that is intended to mirror, for the long-term, the total market
on a capitalization-weighted basis. We discourage slicing and
dicing where the slices will always add up to the whole. In our
view, the indexer without an advisor or broker can do no wrong
by starting with these few foundation-building funds:
| Fund Name |
Ticker |
Expense
Ratio |
Comment |
| |
VTSMX |
0.20% |
Wilshire 5000 |
| |
IWV |
0.20% |
R3K: fewer small caps |
| |
VTI |
0.15% |
Wilshire 5K: wow! |
*exchange-traded funds, which involve brokerage
fees
As usual, Vanguard figures prominently. Do-it-yourself mutual
fund investors will find its plain vanilla Wilshire 5000 fund
hard to beat. On the ETF site, it's Barclays against Vanguard.
Here is it probably more of a contest between indexes than between
funds. Investors should probably decide whether they like Russell
3000 more than Wilshire 5000.
Some Reasonable Alternatives
There plenty of acceptable funds with higher loads sold through
brokers and mutual funds with excellent service and personal service.
We have mixed feelings about them but note generally that if your
advisor diligently rebalances your portfolio for you or you are
otherwise getting excellent service, advice and handholding, then
it seems reasonable that you should want to pay a bit for it.
These are a few of the reasonable alternatives we have found,
all of which track the Wilshire 5000:
| Fund Name |
Ticker |
Expense Ratio |
Comment |
| |
FSTMX |
0.25% |
Trojan horse index fund |
| |
POMIX |
0.40% |
Not that much pricier |
| |
SWTIX |
0.40% |
Broker with
classy site |
| |
VPBMX |
0.27% |
Smaller fund
group |
Fidelity, the bastion of active trading, has plenty of cheap
index funds, and customers swear by their reponsive customer service.
Clearly they are hoping some investors will cross over to their
lucrative (for them) active funds. T. Rowe Price is another huge
and well-established firm but it's fund is a bit pricey with nothing
else to recommend it. Schwab, primarily known as a brokerage firm,
at least has one of the strongest Internet brokerage sites. Vantagepoint
is to be credited with very reasonable fees.
