There are many, many U.S. stock indexes. Naturally there are even more world stock indexes. So I set myself a goal of coming up with a very short list of ETFs that can build a low-cost, globally-diversified portfolio.
I’d start with:
- VT Vanguard Total World Stock Index (FTSE All-World Index); 0.25% expense ratio; foreign holdings: 58.2%
- IGOV S&P/Citigroup International Treasury Bond Fund (S&P/Citigroup International Treasury Bond Index Ex US); 0.35% expense ratio
- IBND SPDR Barclays Capital International Corporate Bond ETF (Barclays Capital Global Aggregate ex-USD > $1B: Corporate Bond Index); 0.55% expense ratio
That’s a good start. However it underweights US holdings (call it home-country bias). These ETFs provide counterbalance:
- BND Total Bond Market ETF (Spliced Barclays USAgg Float Adj Ix); 0.11% expense ratio
- SCHB Schwab U.S. Broad Market ETF (Dow Jones U.S. Broad Stock Market Index); 0.06% expense ratio
That’s my stab at it. Five ETFs that provide reasonable building blocks: VT, IGOV,IBND, BND, and SCHB.