ETF Introduction

  1. At the core, we should have cheap, standard, market cap weighted US stock index ETF. Can consider using sector ETFs or Dividend vs Fundamental vs Equal Weighted index but John Bogle once said sector or country funds could be too narrow. Market cap weighted index has its advantages because as stocks rise in value, they dont need to be sold, hence low turnover results in low trading costs and raises tax efficiency.
  2. There are 4 major index providers, S&P500, Dow Jones, Russell, Wilshire.
  3. Use less ETFs to cover more and don’t mix index providers to reduce overlapping. However less ETFs means less chances to rebalance.

View the ETF groupings here by performance.

Next step.


Author: Zac

Think & Do

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