Top Tier ETF Providers Playoffs II

October 28, 2010 01:24 PM

Based on an article published by Bank Investment Consultant by Matt Ackermann, Vanguard, one of the largest index fund and ETF providers, will offer commission-free trading to its brokerage clients that use its lineups of 46 proprietary ETFs. This represents a comparable move as Fidelity and Schwab.

In addition to Fidelity and Schwab plans, MyPlanIQ now has a Vanguard major ETF plan. Notice since most Vanguard ETFs have short history, the performance data of the model portfolios are meaningful since 2003 (before that, most ETFs did not exist).

The following is the list of the ETFs supported in this plan (for up to date info, please see the Vanguard ETF page.

	Consumer Discretionary	VCR
	Consumer Staples	VDC
	Dividend Appreciation	VIG
	Emerging Markets	VWO
	Energy	VDE
	Europe Pacific	VEA
	European	VGK
	Extended Duration Treasury	EDV
	Extended Market	VXF
	Financials	VFH
	FTSE All-World ex-US	VEU
	FTSE All-World ex-US Small-Cap	VSS
	Growth	VUG
	Health Care	VHT
	High Dividend Yield	VYM
	Industrials	VIS
	Information Technology	VGT
	Intermediate-Term Bond	BIV
	Intermediate-Term Corporate Bond	VCIT
	Intermediate-Term Government Bond	VGIT
	Large-Cap	VV
	Long-Term Bond	BLV
	Long-Term Corporate Bond	VCLT
	Long-Term Government Bond	VGLT
	Materials	VAW
	Mega Cap 300	MGC
	Mega Cap 300 Growth	MGK
	Mega Cap 300 Value	MGV
	Mid-Cap	VO
	Mid-Cap Growth	VOT
	Mid-Cap Value	VOE
	Mortgage-Backed Securities	VMBS
	Pacific	VPL
	REIT	VNQ
	Short-Term Bond	BSV
	Short-Term Corporate Bond	VCSH
	Short-Term Government Bond	VGSH
	Small-Cap	VB
	Small-Cap Growth	VBK
	Small-Cap Value	VBR
	Telecommunication Services	VOX
	Total Bond Market	BND
	Total Stock Market	VTI
	Total World Stock	VT
	Utilities	VPU
	Value	VTV

Vanguard ETFs's 401K plan consists of 43 funds. These funds enable participants to gain exposure to 5 major assets: Emerging Market Equity , Foreign Equity , Fixed Income , US Equity , REITs . The list of minor asset classes covered:

Communications: IXP , PTE , DGG , LTL
Consumer Discretionary: RXI , VCR
Consumer Staples: KXI , VDC , PSL , DPN , RHS
DIVERSIFIED EMERGING MKTS: EEM , GMM , PXH , DEM , SCHE
DIVERSIFIED PACIFIC/ASIA: EPP , VPL , GMF , PAF
Equity Energy: ITE,IXC , IPW , DBE , RYE , DKA
EUROPE STOCK: IEV , VGK , PEF , DEB
Financial: IYF , VFH , IPF , PFI , DRF , RYF
Foreign Large Blend: EFA , VEU , GWL , PFA
FOREIGN SMALL/MID GROWTH: IFSM , VSS , SCHC
Health: IYH,IXJ , VHT , XBI , PBE , DBR , RYH
Industrials: IYJ,EXI , VIS
Intermediate-Term Bond: AGG,CIU , BIV,BND
LARGE BLEND: IVV,IYY,IWV , VTI,VV , SPY , DLN , RSP , SCHX
LARGE GROWTH: IVW,IWZ,JKE , VUG , ELG , QQQQ , RPG , SCHG
LARGE VALUE: IVE,IWW,JKF , VTV , ELV , PWV , RPV , SCHV
LONG GOVERNMENT: TLT,TLH,IEF , EDV,VGLT , TLO , PLW
Long-Term Bond: CLY,LQD , BLV,VCLT
MID-CAP BLEND: IJH,IWR,JKG , VO , MDY,EMM , PJG , DON,EZM , MVV
Mid-Cap Growth: IJK,IWP , VOT , EMG , PWJ , RFG , UKW
MID-CAP VALUE: IJJ,IWS,JKI , VOE , EMV , PWP , RFV , UVU
Natural Resources: IYM,IGE , VAW , XLB,XME , PYZ , DBN , RTM , UYM
REAL ESTATE: IYR,ICF , VNQ
SHORT GOVERNMENT: SHY,SHV , VGSH , PLK , USY
Short-Term Bond: CSJ , BSV,VCSH
SMALL BLEND: IJR,IWM,JKJ , VB , DSC , PJM , DES , SAA,UWM , SCHA
Small Growth: IJT,IWO,JKK , VBK , DSG , PWT , RZG , UKK
SMALL VALUE: IJS,IWN,JKL , VBR , DSV , PWY , RZV , UVT
Technology: MTK , PTF , DBT , RYT , ROM
Utilities: GII , PUI , DBU , RYU , UPW
WORLD STOCK: IOO , VT

As of Oct 15, 2010, this plan investment choice is rated as average based on MyPlanIQ Plan Rating methodology that was designed to measure how effective a plan's available investment funds are . It has the following detailed ratings:

Diversification -- Rated as above average (74%)
Fund Quality -- Rated as below average (33%)
Portfolio Building -- Rated as average (37%)
Overall Rating: average (47%)

The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies ( SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical five asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

REITs:( IYR or VNQ or ICF )
Fixed Income:( AGG or BND )
Foreign Equity:( EFA or VEU )
Emerging Market Equity:( EEM or VWO )
US Equity:( SPY or VTI )
Performance chart (as of Oct 15, 2010)

Performance table (as of Oct 15, 2010)

Portfolio Name	1Yr AR	1Yr Sharpe	3Yr AR	3Yr Sharpe	5Yr AR	5Yr Sharpe
Vanguard ETFs Tactical Asset Allocation Moderate	10%	67%	6%	39%	13%	84%
Vanguard ETFs Strategic Asset Allocation Moderate	13%	92%	3%	9%	8%	39%
Five Core Asset Index ETF Funds Tactical Asset Allocation Moderate	10%	65%	7%	48%	15%	103%
Five Core Asset Index ETF Funds Strategic Asset Allocation Moderate	14%	99%	3%	10%	9%	41%

Currently, asset classes in REITs( IYR , VNQ , ICF ) , Fixed Income( AGG , BND ) and Emerging Market Equity( EEM , VWO ) are doing relatively well. These asset classes are available to Vanguard ETFs participants. To summarize, Vanguard ETFs plan participants can achieve reasonable investment returns by adopting asset allocation strategies that are tailored to their risk profiles. Currently, the tactical asset allocation strategy indicates overweighing on reits , emerging market equity and fixed income funds.

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