ETFs With Ultra-low Expenses and a Counterpoint

By on July 19, 2010

Matt Hougan, at Index Universe, recently wrote about how he was able to assemble a widely diversified portfolio on the cheap back in 2007, and how it has become cheaper still. In June 2007, the expense ratio on Hougan’s portfolio was 0.16 percent. Recently, he was able to replicate the portfolio with an expense ratio of a mere 0.125 percent. Vanguard sparked the initial extreme discounting, with Schwab surprisingly entering the market with a similar expense structure.

Dave Nadig chimed in today with an article arguing that you can do better than Hougan’s portfolio with a more careful selection of ETFs. One example: Nadig points out that Vanguard’s Total Bond Fund (BND) overweights the most debt-ridden corporations.

Sources: Index Universe (Hougan), Index Universe (Nadig: Don’t Confuse Cheap with Good)

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