Altruist Financial Advisors LLC
Fee-Only Investment Management

Domestic Large-Cap Funds

 

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The base of most investors' equity portfolios is (and probably should be — for psychological/behavioural reasons) domestic large-cap funds.  There are several very similar investment options available.  Which is best?

The funds are listed in rough order of our overall preference.

Preferences are listed separately for use in retirement accounts and for taxable accounts.

For a listing of our preferences in other asset classes, see here.

Retirement Accounts (i.e., tax-deferred or tax-exempt accounts)

bulletiShares MSCI USA Momentum Factor ETF (MTUM).  E/R: 0.15%.  This fund tracks the MSCI USA Momentum Index of large- and mid- cap stocks which have been exhibiting strong risk-adjusted price momentum over the past 6- and 12- month periods.  We like that this fund has such a low expense ratio.  We don't like that the index's definition of momentum differs from that shown in the original Jegadeesh/Titman research as optimal.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletVanguard U.S. Momentum Factor ETF (VFMO).  E/R: 0.13%.  This ETF Targets U.S. stocks with strong recent performance.  Stocks are weighed by their momentum score, resulting in a strong exposure to the momentum factor.  The ETF is "actively managed", but it is managed quantitatively, not speculatively.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletAQR Large Cap Momentum Style Fund (AMOMX).  E/R: 0.40%.  This fund invests in large/mid cap US momentum stocks (i.e., stocks that have done well over the past 12 months, excluding the most recent month).  Momentum has been shown to have both a positive risk premium and a negative correlation with the value premium.  Thus, momentum stocks are good diversifiers to value stocks.  As such, this fund is most appropriate for those who are using it to both get large cap exposure and to diversify value exposure elsewhere in their portfolio.  This fund manages to lesson short-term capital gain and dividend distributions.   For more information on momentum investing, see here.

bulletInvesco S&P 500 Momentum Portfolio ETF (SPMO).  E/R: 0.13%.  This fund tracks the S&P 500 Momentum Index of large-cap stocks which have been exhibiting strong risk-adjusted price momentum over the past 12 months (excluding the most recent month).  We don't like that the index's definition of momentum differs from that shown in the original Jegadeesh/Titman research as optimal.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletJPMorgan U.S. Momentum Factor ETF (JMOM).  E/R: 0.12%.  This fund tracks the JPMorgan US Momentum Factor Index of large-cap stocks which have been exhibiting strong risk-adjusted price momentum recently.  We don't like that the index's definition of momentum differs from that shown in the original Jegadeesh/Titman research as optimal.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletFidelity Momentum Factor ETF (FDMO).  E/R: 0.29%.  This ETF attempts to track the Fidelity U.S. Momentum Factor Index of US Large- and Mid- Cap stocks with high momentum over the previous 12 months (excluding the most recent month).  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletAlpha Architect U.S. Quantitative Momentum ETF (QMOM).  E/R: 0.49%.  The Alpha Architect US Quantitative Momentum ETF tracks an equal-weighted index of US stocks with strong and consistent momentum.  QMOM targets the 10% of stocks with the highest total return over the last 12 months, excluding the most recent month. The fund also screens for consistency of momentum by excluding stocks with too many negative-return days during the 12-month period. This methodology produces a few dozen holdings which get weighted equally.  We don't like that the fund has such a relatively high expense ratio and relatively few holdings.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletSPDR Russell 1000 Momentum Focus ETF (ONEO).  E/R: 0.20%.  This ETF attempts to track the Russell 1000 Momentum Focus Index of US Large Cap stocks with high momentum over the previous 12 months (excluding the most recent month).  The Index also somewhat tilts towards stocks with relatively high value, smallness, and quality exposure.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletInvesco DWA Momentum ETF (PDP).  E/R: 0.62%.  This fund tracks the Dorsey Wright Technical Leaders Index of US stocks that demonstrate powerful relative strength characteristics.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletVanguard U.S. Quality Factor ETF (VFQY).  E/R: 0.13%.  This ETF Targets U.S. stocks with strong operational, earnings, and balance sheet quality. Stocks with strong fundamentals have tended to earn a higher return than those with weak fundamentals. The ETF is "actively managed", but it is managed quantitatively, not speculatively.  For more information on ETFs, see here.

bulletFidelity ZERO Large Cap Index Fund (FNILX).  E/R: 0.00%.  Minimum initial investment: $10,000.  Tracks the Fidelity U.S. Large Cap Index.  Obviously, the main attraction here is the extraordinarily low expense ratio.

bulletDFA US Core Equity Market ETF (DFAU).  E/R: 0.12%.  This fund invests in US stocks while emphasizing those with lower market cap, lower relative price, and higher profitability.  Even though it isn't really "style pure," we think that, as impure as it may be, it is one of the best (mostly) large cap US funds for a retirement account.  For more information on ETFs, see here.

bulletVanguard Large-Cap Index Fund Admiral Shares (VLCAX).  E/R: 0.05%.  This fund tracks the obscure CRSP US Large Cap Index.

bulletDFA Enhanced US Large Company Portfolio (DFELX).  E/R: 0.23%.  This fund basically invests in S&P 500 index futures.  Implicit in the price of a futures contract is an assumed interest rate covering the period from purchase of the contract to the contract expiration date.  The futures themselves are a relatively small portion of the portfolio (enough futures are bought to simulate full investment in the index).  An even smaller portion of the portfolio is set aside in very short-term treasuries as collateral.  The remaining cash is invested passively in Short-Term bonds using DFA's "variable maturity" strategy.  If the Short-Term bonds can earn a better risk-adjusted return than the interest rate implicit in the futures price, it is possible to have better risk-adjusted returns than the index (before fees).  This fund has done quite well.  It is important not to use this fund inside a taxable account — it is VERY tax-inefficient.

bulletVanguard 500 Index Fund Admiral Shares (VFIAX).  E/R: 0.04%.  This fund is one of the largest mutual funds in the world.  This, combined with expert implementation, combines to allow this fund to actually beat its index occasionally, which is VERY rare for index funds.  This is the safe choice.  Its performance against the benchmark has been, and we expect will continue to be, outstanding.  Great diversification — low fees — this is the standard against which all others are judged.

bulletDFA US Large Company Portfolio (DFUSX).  E/R: 0.08%.  This is an S&P 500 index fund.

bulletDFA US Large Cap Equity Portfolio (DUSQX).  E/R: 0.19%.  This fund invests in large/mid cap US profitability stocks (i.e., large cap stocks of companies that are currently most profitable, compared to their book value).  It also slightly tilts the portfolio towards small and value stocks.  Stocks of profitable companies have been shown to have both a positive risk premium and a negative correlation with the value premium.  Thus, profitability stocks are good diversifiers to value stocks.  As such, this fund is most appropriate for those who are using it to both get large cap exposure and to diversify value exposure elsewhere in their portfolio.   For more information on profitability investing, see here.

bulletBNY Mellon US Large Cap Core Equity ETF (BKLC).  E/R: 0.00%.  This ETF attempts to track the Morningstar US Large Cap Index of large US companies.  For more information on ETFs, see here.

bulletiShares S&P 500 Index Fund Institutional Shares (BSPIX).  E/R: 0.11%.  Minimum initial investment = $2M, unless you invest through a fee-only RIA or a 401(k).  This fund tracks the S&P 500 Index.

bulletBridgeway Blue Chip Fund (BRLIX).  E/R: 0.15%.  This fund passively invests in the stocks of ~35 of the largest US companies.  As such, the fund is dramatically less diversified than the other choices here.  However, since the companies it invests in are among the most liquid on the planet, internal transaction expenses are very low.  The fund equal weights the ~35 stocks, using new money to rebalance.  The equal weighting should lessen the fund's volatility.  The fund manages to minimize capital gains distributions, but this shouldn't adversely affect its pre-tax performance.

bulletVanguard S&P 500 ETF (VOO).  E/R: 0.03%.  This is the ETF share class of the Vanguard 500 Index Fund (VFIAX).  For more information on ETFs, see here.

bulletSPDR Portfolio Large Cap ETF (SPLG).  E/R: 0.03%.  This ETF attempts to track the SSGA Large Cap Index of large US companies.  For more information on ETFs, see here.

bulletSchwab U.S. Large Cap ETF (SCHX).  E/R: 0.03%.  This ETF tracks the Dow Jones U.S. Large-Cap Total Stock Market Index.  For more information on ETFs, see here.

bulletVanguard Large-Cap ETF (VV).  E/R: 0.04%.  This is the ETF share class of the Vanguard Large-Cap Index Fund (VLACX).  For more information on ETFs, see here.

bulletVanguard Mega Cap 300 ETF (MGC).  E/R: 0.11%.  This ETF is a share class of the Vanguard Mega Cap 300 Index Fund Institutional Shares (VMCTX).  It attempts to track the CRSP US Mega Cap Index of very large US companies.  For more information on ETFs, see here.

bulletVanguard Russell 1000 ETF (VONE).  E/R: 0.12%.  This ETF is a share class of the Vanguard Russell 1000 Index Fund Institutional Shares (VRNIX).  It attempts to track the Russell 1000 Index of large US companies.  For more information on ETFs, see here.

bulletiShares S&P 500 Fund (IVV).  E/R: 0.04%.  This is an ETF which tracks the S&P 500 index.  For more information on ETFs, see here.

bulletSSgA S&P 500 Index Fund (SVSPX).  E/R: 0.16%.  This fund tracks the S&P 500 Index.

bulletVanguard Large-Cap Index Fund (VLACX).  E/R: 0.24%.  This fund tracks the obscure CRSP US Large Cap Index.

bulletGuggenheim Russell Top 50 Fund (XLG).  E/R: 0.20%.  This is an ETF which tracks the Russell Top 50 index — the largest 50 US stocks.  While its E/R is higher than many others here, we like that it is very style-pure (i.e., only large cap stocks — no mid or small cap) and the fact that its stocks are among the most liquid on the planet should give it extremely low internal transaction costs.  For more information on ETFs, see here.

bulletiShares Russell Top 200 Fund (IWL).  E/R: 0.20%.  This is an ETF which tracks the Russell Top 200 index — the largest 200 US stocks.  While its E/R is higher than many others here, we like that it is very style-pure (i.e., only large cap stocks — no mid or small cap) and the fact that its stocks are among the most liquid on the planet should give it extremely low internal transaction costs.  For more information on ETFs, see here.

bulletiShares Russell 1000 Fund (IWB).  E/R: 0.15%.  This is an ETF which tracks the Russell 1000 index.  For more information on ETFs, see here.

bulletS&P 500 SPDR (SPY).  E/R: 0.10%.  This is the oldest, largest ETF in the world.  On the plus side, its bid-ask spreads tend to be smaller than those of other ETFs (because of high demand for shares).  On the other hand, its E/R is higher than several alternatives and, unlike the other ETFs listed here, it is organized as a Unit Investment Trust.  The main problem with this is that, as a UIT, it is required to hold dividends it receives in a non-interest account until paid out to investors.  This causes a "cash-drag" on the fund's earnings, as compared with alternatives.  For more information on ETFs, see here.

bulletiShares Morningstar Large Core Fund (JKD).  E/R: 0.20%.  This is an ETF which tracks the stocks classified by Morningstar as "Large Core."  With the relatively high expense ratio, we see no good reason to buy this fund over its less expensive, more diversified alternatives above.  For more information on ETFs, see here.

bulletiShares S&P 100 Fund (OEF).  E/R: 0.20%.  This is an ETF which tracks the S&P 100 index — a subset of stocks in the S&P 500 index.  We see little reason to use this fund.  It is less diversified and more costly than most alternatives here.  For more information on ETFs, see here.

bulletWisdomTree Earnings 500 Fund (EPS).  E/R: 0.28%.  This is an ETF which tracks the WisdomTree Earnings 500 Index.  This index consists of the 500 largest (by market cap) companies in the WisdomTree Earnings Index of US companies with positive earnings.  The index weights the 500 companies by the cash value of their earnings.  For more information on ETFs, see here.

bulletWisdomTree LargeCap Dividend Fund (DLN).  E/R: 0.28%.  This is an ETF which tracks the WisdomTree LargeCap Dividend Index.  This index consists of the 300 largest (by market cap) companies in the WisdomTree Dividend Index of regular dividend paying companies.  The index weights the 300 companies by the cash value of their dividend payouts.  For more information on ETFs, see here.

bulletInvesco FTSE RAFI 1000 Portfolio (PRF).  E/R: 0.39%.  This is an ETF which tracks the FTSE RAFI 1000, a non-cap weighted index of US large cap stocks.  The high expense ratio and relative illiquidity costs of new funds such as this cause us pause at this time.  For more information on ETFs, see here.
 
bulletSchwab Fundamental US Large Company Index Fund (SFLVX).  E/R: 0.59%.  This fund tracks the FTSE RAFI US 1000 index, a non-cap weighted index of US large cap stocks.  The high expense ratio precludes this being a good choice.  Two lower cost share classes are available for higher minimum dollar amounts, but even those are too expensive, given the less expensive large cap choices above.
 
bulletPIMCO Fundamental IndexPLUS Fund Institutional Shares (PFPIX).  E/R: 0.65%.  This fund basically invests in Research Affiliates 1000 Index futures.  Implicit in the price of a futures contract is an assumed interest rate covering the period from purchase of the contract to the contract expiration date.  The futures themselves are a relatively small portion of the portfolio (enough futures are bought to simulate full investment in the index).  An even smaller portion of the portfolio is set aside in very short-term treasuries as collateral.  The remaining cash is invested actively in Short-Term bonds.  If the Short-Term bonds can earn a better risk-adjusted return than the interest rate implicit in the futures price, it is possible to have better risk-adjusted returns than the index (before fees).  It is important not to use this fund inside a taxable account — it is VERY tax-inefficient..

Taxable Accounts

bulletiShares MSCI USA Momentum Factor ETF (MTUM).  E/R: 0.15%.  This fund tracks the MSCI USA Momentum Index of large- and mid- cap stocks which have been exhibiting strong risk-adjusted price momentum over the past 6- and 12- month periods.  We like that this fund has such a low expense ratio.  We don't like that the index's definition of momentum differs from that shown in the original Jegadeesh/Titman research as optimal.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletAQR Large Cap Momentum Style Fund (AMOMX).  E/R: 0.40%.  This fund invests in large/mid cap US momentum stocks (i.e., stocks that have done well over the past 12 months, excluding the most recent month).  Momentum has been shown to have both a positive risk premium and a negative correlation with the value premium.  Thus, momentum stocks are good diversifiers to value stocks.  As such, this fund is most appropriate for those who are using it to both get large cap exposure and to diversify value exposure elsewhere in their portfolio.  This fund manages to lesson short-term capital gain and dividend distributions.   For more information on momentum investing, see here.

bulletVanguard U.S. Momentum Factor ETF (VFMO).  E/R: 0.13%.  This ETF Targets U.S. stocks with strong recent performance.  Stocks are weighed by their momentum score, resulting in a strong exposure to the momentum factor.  The ETF is "actively managed", but it is managed quantitatively, not speculatively.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletInvesco S&P 500 Momentum Portfolio ETF (SPMO).  E/R: 0.13%.  This fund tracks the S&P 500 Momentum Index of large-cap stocks which have been exhibiting strong risk-adjusted price momentum over the past 12 months (excluding the most recent month).  This is a very new fund that will be somewhat illiquid for a while - until/unless it becomes larger.  We don't like that the index's definition of momentum differs from that shown in the original Jegadeesh/Titman research as optimal.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletJPMorgan U.S. Momentum Factor ETF (JMOM).  E/R: 0.12%.  This fund tracks the JPMorgan US Momentum Factor Index of large-cap stocks which have been exhibiting strong risk-adjusted price momentum recently.  We don't like that the index's definition of momentum differs from that shown in the original Jegadeesh/Titman research as optimal.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletFidelity Momentum Factor ETF (FDMO).  E/R: 0.29%.  This ETF attempts to track the Fidelity U.S. Momentum Factor Index of US Large- and Mid- Cap stocks with high momentum over the previous 12 months (excluding the most recent month).  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletAlpha Architect U.S. Quantitative Momentum ETF (QMOM).  E/R: 0.49%.  The Alpha Architect US Quantitative Momentum ETF tracks an equal-weighted index of US stocks with strong and consistent momentum.  QMOM targets the 10% of stocks with the highest total return over the last 12 months, excluding the most recent month. The fund also screens for consistency of momentum by excluding stocks with too many negative-return days during the 12-month period. This methodology produces a few dozen holdings which get weighted equally.  We don't like that the fund has such a relatively high expense ratio and relatively few holdings.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletSPDR Russell 1000 Momentum Focus ETF (ONEO).  E/R: 0.20%.  This ETF attempts to track the Russell 1000 Momentum Focus Index of US Large Cap stocks with high momentum over the previous 12 months (excluding the most recent month).  The Index also somewhat tilts towards stocks with relatively high value, smallness, and quality exposure.    For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletInvesco DWA Momentum ETF (PDP).  E/R: 0.62%.  This fund tracks the Dorsey Wright Technical Leaders Index of US stocks that demonstrate powerful relative strength characteristics.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletVanguard U.S. Quality Factor ETF (VFQY).  E/R: 0.13%.  This ETF Targets U.S. stocks with strong operational, earnings, and balance sheet quality. Stocks with strong fundamentals have tended to earn a higher return than those with weak fundamentals. The ETF is "actively managed", but it is managed quantitatively, not speculatively.  For more information on ETFs, see here.  For more information on momentum investing, see here.

bulletVanguard Tax-Managed Capital Appreciation Fund Admiral Shares (VTCLX).  E/R: 0.11%.  This fund tracks the Russell 1000 index of large-cap stocks while minimizing both dividend and capital gains distributions.  This fund is expected to be the most tax efficient of all choices here.

bulletDFA US Core Equity Market ETF (DFAU).  E/R: 0.12%.  This fund invests in US stocks while emphasizing those with lower market cap, lower relative price, and higher profitability.  Even though it isn't really "style pure," we think that, as impure as it may be, it is one of the best (mostly) large cap US funds.  For more information on ETFs, see here.

bulletVanguard Large-Cap Index Fund Admiral Shares (VLCAX).  E/R: 0.05%.  This fund tracks the obscure CRSP US Large Cap Index.  The fact that there is an ETF associated with this fund should make it more tax-efficient than it otherwise would be (low basis stocks will tend to be disposed of via periodic in-kind redemptions of the ETF shares).  In fact, because ETF shares make up a large portion of the money in this fund, it is likely to be almost as (capital gains) tax efficient as a standard ETF.

bulletSPDR Portfolio Large Cap ETF (SPLG).  E/R: 0.03%.  This ETF attempts to track the SSGA Large Cap Index of large US companies.  For more information on ETFs, see here.

bulletSchwab U.S. Large Cap ETF (SCHX).  E/R: 0.03%.  This ETF tracks the Dow Jones U.S. Large-Cap Total Stock Market Index.  For more information on ETFs, see here.

bulletBridgeway Blue Chip Fund (BRLIX).  E/R: 0.15%.  This fund passively invests in the stocks of ~35 of the largest US companies.  As such, the fund is dramatically less diversified than the other choices here.  However, since the companies it invests in are among the most liquid on the planet, internal transaction expenses are very low.  The fund equal weights the ~35 stocks, using new money to rebalance.  The equal weighting should lessen the fund's volatility.  The fund manages to minimize capital gains distributions.

bulletVanguard Large-Cap ETF (VV).  E/R: 0.04%.  This is the ETF share class of the Vanguard Large-Cap Index Fund (VLACX).  However, unlike other non-Vanguard ETFs, this fund will be only as tax efficient as its underlying fund — no more and no less.  We expect VLACX to be extremely capital gains tax efficient for at least the following reasons:
 
bulletThe index it tracks has very little turnover (by design).
bulletWhen there is turnover, it will generally be due to a stock holding being sold because it has gotten too small in relative market capitalization — this suggests realization of losses.
bulletA large portion of VLACX (almost half) is the ETF shares (VV), which increases the capital gains tax efficiency of VLACX through its share redemption process.

For more information on ETFs, see here.

bulletBNY Mellon US Large Cap Core Equity ETF (BKLC).  E/R: 0.00%.  This ETF attempts to track the Morningstar US Large Cap Index of large US companies.  For more information on ETFs, see here.

bulletVanguard Mega Cap 300 ETF (MGC).  E/R: 0.11%.  This ETF is a share class of the Vanguard Mega Cap 300 Index Fund Institutional Shares (VMCTX).  It attempts to track the CRSP US Mega Cap Index of very large US companies. 

However, unlike other non-Vanguard ETFs, this fund will be only as tax efficient as its underlying fund — no more and no less.  We expect VMCTX to be extremely capital gains tax efficient for at least the following reasons:
 
bulletThe index it tracks has very little turnover (by design).
bulletWhen there is turnover, it will generally be due to a stock holding being sold because it has gotten too small in relative market capitalization — this suggests realization of losses.
bulletA very large portion of VMCTX is expected to be the ETF shares (MGC), which increases the capital gains tax efficiency of VMCTX through its share redemption process.

For more information on ETFs, see here.

bulletVanguard Russell 1000 ETF (VONE).  E/R: 0.12%.  This ETF is a share class of the Vanguard Russell 1000 Index Fund Institutional Shares (VRNIX).  It attempts to track the Russell 1000 Index of large US companies.  However, unlike other non-Vanguard ETFs, this fund will be only as tax efficient as its underlying fund — no more and no less.  For more information on ETFs, see here.

bulletVanguard 500 Index Fund Admiral Shares (VFIAX).  E/R: 0.04%.  This fund is one of the largest mutual funds in the world.  This, combined with expert implementation, combines to allow this fund to actually beat its index occasionally, which is VERY rare for index funds.  This is the safe choice.  Its performance against the benchmark has been, and will continue to be, outstanding.  Great diversification — low fees — this is the standard against which all others are judged. 

bulletVanguard S&P 500 ETF (VOO).  E/R: 0.03%.  This is the ETF share class of the Vanguard 500 Index Fund (VFIAX).  For more information on ETFs, see here.

bulletiShares S&P 500 Fund (IVV).  E/R: 0.04%.  This is an ETF which tracks the S&P 500 index.  For more information on ETFs, see here.

bulletFidelity ZERO Large Cap Index Fund (FNILX).  E/R: 0.00%.  Minimum initial investment: $10,000.  Tracks the Fidelity U.S. Large Cap Index.  Obviously, the main attraction here is the extraordinarily low expense ratio.

bulletiShares S&P 500 Index Fund Institutional Shares (BSPIX).  E/R: 0.11%.  This fund tracks the S&P 500 Index.

bulletSSgA S&P 500 Index Fund (SVSPX).  E/R: 0.16%.  This fund tracks the S&P 500 Index.

bulletGuggenheim Russell Top 50 Fund (XLG).  E/R: 0.20%.  This is an ETF which tracks the Russell Top 50 index — the largest 50 US stocks.  While its E/R is higher than many others here, we like that it is very style-pure (i.e., only large cap stocks — no mid or small cap) and the fact that its stocks are among the most liquid on the planet should give it extremely low internal transaction costs.  For more information on ETFs, see here.

bulletiShares Russell Top 200 Fund (IWL).  E/R: 0.20%.  This is an ETF which tracks the Russell Top 200 index — the largest 200 US stocks.  While its E/R is higher than many others here, we like that it is very style-pure (i.e., only large cap stocks — no mid or small cap) and the fact that its stocks are among the most liquid on the planet should give it extremely low internal transaction costs.  For more information on ETFs, see here.

bulletiShares Russell 1000 Fund (IWB).  E/R: 0.15%.  This is an ETF which tracks the Russell 1000 index.  For more information on ETFs, see here.

bulletS&P 500 SPDR (SPY).  E/R: 0.09%.  This is the oldest, largest ETF in the world.  On the plus side, its bid-ask spreads tend to be smaller than those of other ETFs (because of high demand for its shares).  On the other hand, its E/R is higher than IVV's, and, unlike the other ETFs listed here, it is organized as a Unit Investment Trust.  The main problem with this is that, as a UIT, it is required to hold dividends it receives in a non-interest account until paid out to investors.  This causes a "cash-drag" on the fund's earnings, as compared with alternatives.  For more information on ETFs, see here.

bulletiShares Morningstar Large Core Fund (JKD).  E/R: 0.20%.  This is an ETF which tracks the stocks classified by Morningstar as "Large Core."  With the relatively high expense ratio, we see no good reason to buy this fund over its less expensive, more diversified alternatives above.  For more information on ETFs, see here.

bulletiShares S&P 100 Fund (OEF).  E/R: 0.20%.  This is an ETF which tracks the S&P 100 index — a subset of stocks in the S&P 500 index.  We see little reason to use this fund.  It is less diversified and more costly than most alternatives here.  For more information on ETFs, see here.

bulletWisdomTree Earnings 500 Fund (EPS).  E/R: 0.28%.  This is an ETF which tracks the WisdomTree Earnings 500 Index.  This index consists of the 500 largest (by market cap) companies in the WisdomTree Earnings Index of US companies with positive earnings.  The index weights the 500 companies by the cash value of their earnings.  For more information on ETFs, see here.

bulletWisdomTree LargeCap Dividend Fund (DLN).  E/R: 0.28%.  This is an ETF which tracks the WisdomTree LargeCap Dividend Index.  This index consists of the 300 largest (by market cap) companies in the WisdomTree Dividend Index of regular dividend paying companies.  The index weights the 300 companies by the cash value of their dividend payouts.  For more information on ETFs, see here.

bulletInvesco FTSE RAFI 1000 Portfolio (PRF).  E/R: 0.39%.  This is an ETF which tracks the FTSE RAFI 1000, a non-cap weighted index of US large cap stocks.  The high expense ratio and relative illiquidity costs (i.e., bid-ask spreads) of new ETFs such as this cause us pause at this time.  For more information on ETFs, see here.

bulletSchwab Fundamental US Large Company Index Fund (SFLVX).  E/R: 0.59%.  This fund tracks the FTSE RAFI US 1000 index, a non-cap weighted index of US large cap stocks.  The high expense ratio precludes this being a good choice.  Two lower cost share classes are available for higher minimum dollar amounts, but even those are too expensive, given the less expensive large cap choices above.
 
bulletDFA Tax-Managed US Equity Portfolio (DTMEX).  E/R: 0.22%.  This fund is really an all-market fund, which is why it is low-rated here.  If it were more style-pure (i.e., entirely composed of large-cap stocks), it might be our top choice.  The fund manages to minimize dividend as well as capital gain distributions.

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This web page contains the current opinions of Eric E. Haas at the time it is written—and such opinions are subject to change without notice.  This web page is intended to serve two purposes:

bulletTo educate the public; and
bulletTo provide disclosure of Mr. Haas' opinions to prospective clients.  We believe that prospective clients are well-served by being made aware of what they are buying—and what they are buying is advice that is based on these opinions.

We believe the information provided here to be useful and accurate at the time it is written.  Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

No investor should invest solely on the basis of information listed here.  Before investing, it is important to consult each prospective investment's prospectus and consider both its risk/return characteristics and its effect on your overall portfolio.

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice.  Where specific advice is necessary or appropriate, Altruist recommends consultation with a qualified tax adviser, CPA, financial planner, or investment adviser.  If you would like to discuss the rationale or support for any particular idea expressed on this web page, feel free to contact us.

 

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