The iShares MSCI Brazil ETF peaked on January 25 and has since declined 30.8%, officially entering c...
4 ETFs You Can Hold Forever
02/24/2015 9:00 am EST
Some people want to stay fully invested at all times or use continual dollar cost averaging to their advantage. In order to do so, you may find yourself searching for the perfect investment or asset allocation to hold forever, suggests David Fabian, FMD Capital.
Instead of paying someone to do that for you, I recommend taking a simpler approach that incorporates multiple asset classes through a flexible investment vehicle. The following funds represent excellent opportunities for long-term investors.
Vanguard Total Stock Market ETF (VTI)
You can’t go wrong with VTI for complete coverage of the US stock market across multiple styles and market caps. This ETF charges a rock bottom expense ratio of just 0.05% for access to 3,800 US-based publicly traded companies that include large-, mid-, and small-cap segments.
While that level of diversification may seem overly broad to some investors, it is perfect for those who are looking for a core position in a small account or to simplify many overlapping funds down to a single entity. VTI has over $50 billion in total assets and a current 30-day SEC yield of 1.88%.
Vanguard Total International Stock ETF (VXUS)
Often times, I see investors trying to get cute with their international exposure to overweighting certain areas of the globe in order to try and capture the best performers.
However, if I were to pick just one ETF to bet on the entire market outside of the US, it would be VXUS.
This ETF contains over 5,800 securities of both developed and emerging market nations around the world. That includes everything from Canada to China and everywhere in between. VXUS follows a passive index approach with a minimal expense ratio of just 0.14%.
PIMCO Total Return Fund (BOND)
Picking a single bond fund to pair with my stock exposure is not an easy task considering the challenges facing fixed-income over the next several years.
Ultra low yields around the globe have made the way forward a potentially treacherous one given the expectation of interest rate cycles changing over time.
Despite the turmoil associated with its portfolio manager leaving last year, I would be inclined to incorporate BOND in my portfolio as a solid long-term holding. It is one of the only truly global broad-market offerings in the ETF space with sufficient size and history.
Cambria Global Asset Allocation ETF (GAA)
If you are looking for the structure of a global multi-asset index that takes care of rebalancing your asset allocation, GAA should certainly be on your radar.
Owning 28 underlying ETFs, this fund of funds is the first ETF of its kind to offer exposure to stocks, bonds, real estate, and commodities with zero expense ratio.
The ultra-low fees to own this fund, combined with the added bonus of automatic rebalancing, make this an attractive position for moderate or conservative investors looking for a long-term core holding.
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