If you're a newbie investor, you may find total market exchange
traded funds (ETFs) an appealing foundation for your portfolio.
Let's explore this asset class.
is the total combination of publicly traded stocks as weighted by
capitalization. Total U.S. bond market and foreign equities may
also be included in their own total market sets. ETFs use a
sampling methodology to follow every security in a total market
Why would you want such a fund?
When confronted with total market equities, most wonder if it is
possible to beat by investing in sub-indexes,
comments Will McClatchy for ETF Zone
. Picking out the top-performing sectors, however, is usually
tougher to execute than you might think. And if you find that to be
so, then total market ETFs could be for you.
People invest in total market ETFs simply because they do not
have the training, time or motivation to consistently and
constantly pick out sub-indexes. The experts also argue that trying
to beat the market brings about higher risks than the potential for
Total market ETFs are also an appealing option if you simply
want a one-stop shop. The number of ETFs that deliver such an
all-encompassing strategy has exploded in recent years.
Low-cost total market ETFs include
Vanguard Total Stock Market ETF (
; annual fees: 0.07%.
SPDR Dow Jones Wilshire Total Market ETF (NYSEArca:
; annual fees: 0.2%.
iShares Russell 3000 ETF (NYSEArca: IWV)
; annual fees: 0.2%.
ETFs based on broad indexes include more small-caps; thus, tend
to have improved diversification, lower average market cap, higher
average growth rates, and higher risk.
International total market ETFs include:
Vanguard Total World Stock ETF (NYSEArca: VT)
, annual fees: 0.25%; VT tries to reflect the FTSE All-World
Index of about 2,900 stocks in 47 countries, with 44% of holdings
in the US.
SPDR MSCI ACWI ex-US ETF (NYSEArca: CWI)
; annual fees: 0.35%; CWI tries to reflect the global publicly
traded companies outside the US.
SPDR S&P World ex-US ETF (NYSEArca: GWL)
; annual fees: 0.35%; GWL is very similar to CWI. This global
(except US) total stock ETF has slightly higher average market
Growth vs. Value:
iShares Russell 3000 Growth ETF (NYSEArca: IWZ)
, annual fees: 0.25%; IWZ holds 1,800 stocks from the Russell
3000 that have higher projected growth and higher price-to-book
iShares Russell 3000 Value ETF (NYSEArca: IWW)
, annual fees: 0.25%; IWW holds everything that IWZ does
PowerShares Autonomic Balanced NFA Global Asset Portfolio
, annual fees: 0.25%; PCA holds PowerShareses, iShares and
Vanguard ETFs in a portfolio of 60% stocks and 40% bonds, with a
majority of US-based assets.
Claymore U.S.-1-The Capital Markets ETF (AMEX:
, annual fees: 0.55%; UEM is exposed to 2,000 US stocks and fixed
income of every type.
Max Chen contributed to this article