The custom portfolio management will be built using low cost index ETFs, invested in tax-advantaged accounts when possible based on an individual Investor’s profile.
The components of the proper custom portfolio management include:
- Low Cost Index ETFs
- Risk-Based Portfolio Construction
- The Power of Compounding
- Tax Optimization Strategies
LOW COST INDEX ETFS
Portfolios will be allocated to low cost exchange traded funds “ETF’s”, that will track the overall performance of an underlying index. Think of the SPDR Funds that are always advertised on TV. A basic SPDR Fund (NYSE: SPY) is an ETF that invests in the companies that compromise the S&P 500 Index. Therefore as the S&P 500 goes, so does SPY.
But SPY is not the only ETF mirroring the performance of the S&P 500. And, it’s not the cheapest S&P 500 ETF Fund out there. We choose not to invest in SPY because there is another S&P 500 ETF with a lower administrative fee. A fee that is not easily discernible when conducting basic research. See the lack of information from Yahoo! below.
In addition many low-cost ETFs are eligibile for low- or no-commissions on certain discount online brokers, such as TD Ameritrade.