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Mutual Funds vs. ETFs for my Roth IRA
Old 12-02-2009, 07:57 PM   #1
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Mutual Funds vs. ETFs for my Roth IRA

I am going to start a Roth IRA and am a little confused between mutual funds and ETFs. I plan on buying and holding for the long term; which one would be cheaper?

My preference is for something aggressive and global/international, or maybe a global index. My reasoning is that various countries' stock markets have done very well in the past, eg, the Japanese stock market did much better than the U.S. market for a period of time, and if I invest in American funds I would be missing these trends, while if I invest in a global fund I have access to both American and international stocks.

Some of the global mutual funds I have looked at are Oppenheimer Global Opportunities and Oakmark Global.

What strategies have people used for international funds? Is there a such thing as a global index fund and how has it performed in the long run?

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Old 12-02-2009, 08:03 PM   #2
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I'll speak to the choice of Oppenheimer funds. I was a fool and invested via a broker for many years. He put me in Oppenheimer funds but the problem is you pay 5.75% up front charge just to put money into the fund. Then the ER's are much higher than let's say Vanguard. It'll take you a few years just to make this money back and be back to even.

It took me till I was almost 50 to figure this scam out but most of my money is now with Vanguard.

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Old 12-02-2009, 08:34 PM   #3
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If you don't buy/sell/rebalance too often, or get free trades, then ETF's are most likely the cheapest. I track VT, which is Vanguard's Total World Stock ETF. VTWSX is the fund version, with 0.16% higher ER.

I like OAKGX a lot and hold it in my portfolio. But at 1.16% ER it's definitely more expensive. But worth it to me. YMMV.
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Old 12-02-2009, 08:39 PM   #4
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VEU would be the least expensive and best foreign fund assuming you don't pay a commission to buy/sell and you only trade when the bid/ask spread is 1 cent or so.

If you want a value tilt, EFV. If you don't want any emerging markets, then VEA. If you need some small cap then VSS.

Full disclosure: I own VEU and VSS.
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