Beating the Market- Portfolio Advice

[charlottebandito]

I've been studying the differences between ETFs and MF to diversify my non-retirement account. What I'm thinking is that since ETFs primarily work their corresponding indices, there is little need for active management. But MFs attempt to beat the market which require active management i think.

Began liquidating some of my other MFs and purchased some ETFs for long-term growth.
- ishares S&P 500
- Nasdaq 100
- Russell 3000 value
- MSCI EAFE
- VIPER Energy
- VIPER Utilities

I'm keeping my Fidelity Contrafund (Large Growth) & Royce Value (Small Blend). Late start, but have 50K in non-retirement so far and cash reserves in MM.

 

[wildcat]

I am still saying ETFs are best for one time bets or if you want extra weigth in a particular sector/country (yikes)/style.  Just think every time you want to add to one of your ETFs it is a brokerage fee.  Reoccurring expenses will zap your returns, via high exp ratios/high tax bills/high broker fees.  Get into index MFs for the long-term bread and butter portion of your portfolio --- nuff said. 

I would drop the 2 active funds but that is me.  Any style tilted index funds are prob better over the long run but should be in a non-tax account.  Tax should be blend index funds, maybe 1 active if you are die hard believer.  To me tax accounts should be very bland and boring but the point is to pay as little as possible in taxes over time.

FYI Russell is coming out with a new micro index benchmark if you want to play that area.  The nex benchmark will produce more micro ETFs and index funds.  I know Royce likes to play in the really small area so it may give you more options.

Oh and if you can match the market then you will be among the elite. Thought I would lower the pressure to beat it.

 

[laurence]

Can't emphasize Wildcats first point enough. You don't want to DCA into an ETF, those transaction fees will eat you up. Plenty of low cost index MF's out there to DCA into. Vanguard! Wellington, Wellesly, S&P index, you get the idea.

 

[razztazz]

Low cost MF's, eh?

Is that the same as a "Cheap B*astard"

 

[unclemick]

I hope so. Then when you get old - slowly morph into a classy curmudgeon - after your long appenticeship as a CB or as the SO put's it - "you cheap SOB - you can't take it with you."

 

[HFWR]

Low cost MF's, eh?

Is that the same as a "Cheap B*astard"

I resemble that remark!!  

I have several ETFs in my self-directed 401k; DCA into funds in the not-self-directed portion. Caveat: I believe Bernstein in "The Four Pillars" claimed that MFs track their respective indices better than ETFs. Don't have the book handy...

 

[maddythebeagle]

"I have several ETFs in my self-directed 401k"

I have the option for a self-directed portion of my plan but havnt looked at. Instead there are 3 low cost index funds that I use. With the ETFs do you look at sectors of the market that you think are undervalued? as if there are any, lol.

 

[HFWR]

Within the plan are SP500, Russ2000, and EAFE international, along with ST bond fund and "ick" company stock. I use the ETFs for REITs, GLD, emerging markets, TIPs, etc.

 

[maddythebeagle]

Within the plan are SP500, Russ2000, and EAFE international, along with ST bond fund and "ick" company stock. I use the ETFs for REITs, GLD, emerging markets, TIPs, etc.

- I have the options of the sp500, mid cap index and small cap index. Last year, I decided to split 1/3 each. The mid cap has outperformed. There is also an international fund but has higher expenses. I will probably look at the self directed to look for an international fund or etf. My feeling is the international economy is connected and the us large caps alreay have exposure overseas, so dont like the extra expenses.