As many brokerages such as Fidelity and Schwab plans,  Vanguard provides a list of commission free ETFs. They are essentially all of Vanguard ETFs. Clients can trade these ETFs in a Vanguard brokerage account for free. For more details, please see the Vanguard ETF page.

 We use these ETFs to construct a plan which consists of 52 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, REITs, Emerging Market Equity, Fixed Income.

 

Asset Class Ticker Name
Consumer Discretionary VCR Vanguard Consumer Discretionary ETF
Consumer Staples VDC Vanguard Consumer Staples ETF
LARGE BLEND VIG Vanguard Dividend Appreciation ETF
DIVERSIFIED EMERGING MKTS VWO Vanguard Emerging Markets Stock ETF
Equity Energy VDE Vanguard Energy ETF
Foreign Large Blend VEA Vanguard Europe Pacific ETF
EUROPE STOCK VGK Vanguard European ETF
LONG GOVERNMENT EDV Vanguard Extended Dur Trs Idx ETF
Financial VFH Vanguard Financials ETF
Foreign Large Blend VEU Vanguard FTSE All-World ex-US ETF
FOREIGN SMALL/MID GROWTH VSS Vanguard FTSE All-Wld ex-US SmCp Idx ETF
LARGE GROWTH VUG Vanguard Growth ETF
Health VHT Vanguard Health Care ETF
LARGE VALUE VYM Vanguard High Dividend Yield Indx ETF
Industrials VIS Vanguard Industrials ETF
Technology VGT Vanguard Information Technology ETF
Intermediate-Term Bond BIV Vanguard Intermediate-Term Bond ETF
Intermediate-Term Bond VCIT Vanguard Interm-Tm Corp Bd Idx ETF
Long-Term Bond BLV Vanguard Long-Term Bond Index ETF
Long-Term Bond VCLT Vanguard Long-Term Corp Bond Idx ETF
LONG GOVERNMENT VGLT Vanguard Long-Term Govt Bd Idx ETF
Natural Resources VAW Vanguard Materials ETF
LARGE BLEND MGC Vanguard Mega Cap 300 Index ETF
LARGE GROWTH MGK Vanguard Mega Cap 300 Gr Index ETF
LARGE VALUE MGV Vanguard Mega Cap 300 Value Index ETF
MID-CAP BLEND VO Vanguard Mid Cap ETF
Mid-Cap Growth VOT Vanguard Mid-Cap Growth ETF
MID-CAP VALUE VOE Vanguard Mid-Cap Value ETF
Intermediate-Term Bond VMBS Vanguard Mortgage-Backed Sec Idx ETF
DIVERSIFIED PACIFIC/ASIA VPL Vanguard Pacific Stock ETF
REAL ESTATE VNQ Vanguard REIT Index ETF
Short-Term Bond BSV Vanguard Short-Term Bond ETF
SHORT GOVERNMENT VGSH Vanguard Short-Term Govt Bd Idx ETF
SMALL BLEND VB Vanguard Small Cap ETF
Small Growth VBK Vanguard Small Cap Growth ETF
SMALL VALUE VBR Vanguard Small Cap Value ETF
Communications VOX Vanguard Telecom Services ETF
Intermediate-Term Bond BND Vanguard Total Bond Market ETF
LARGE BLEND VTI Vanguard Total Stock Market ETF
WORLD STOCK VT Vanguard Total World Stock Index ETF
Utilities VPU Vanguard Utilities ETF
LARGE VALUE VTV Vanguard Value ETF
ROOT CASH CASH
Short-Term Bond VCSH Vanguard Short-Term Corp Bd Idx ETF
Intermediate Government VGIT Vanguard Interm-Tm Govt Bd Idx ETF
Global Real Estate VNQI Vanguard Global ex-US Real Estate ETF
LARGE BLEND VOO Vanguard S&P 500 ETF
LARGE BLEND VV Vanguard Large Cap ETF
MID-CAP BLEND VXF Vanguard Extended Market Index ETF
Foreign Large Blend VXUS Vanguard Total Intl Stock Idx ETF
Inflation-Protected Bond VTIP Vanguard Shrt-Term Infl-Prot Sec Idx ETF
WORLD BOND BNDX Vanguard Total Intl Bd Idx ETF

 

Asset Class Number of funds
Balanced Fund 0
REITs 2
Fixed Income 14
Commodity 0
Sector Fund 10
Foreign Equity 5
Emerging Market Equity 2
US Equity 17
Other 2
Total 52

 

As of Sep 13, 2013, 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 (83%)
Fund Quality — Rated as below average (27%)
Portfolio Building — Rated as average (43%)
Overall Rating: average (50%)

MyPlanIQ offers two asset allocation strategies: strategic and tactical asset allocation strategies (SAA and TAA for participants in Vanguard ETFs).

Strategic Asset Allocation is based on well known modern portfolio theory and its key features include: diversification, proper fund selection and periodically re-balancing.

Tactical Asset Allocation works on a diversified array of assets provided by funds in a plan and adjusts asset mixes based on market conditions such as asset price momentum utilized by TAA.

The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies. For comparison purpose, we also include the moderate model portfolios of a typical 5 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

US Equity: SPY or VTI
Foreign Equity: EFA or VEU
REITs: IYR or VNQ or ICF
Emerging Market Equity: EEM or VWO
Fixed Income: AGG or BND
Performance chart (as of Sep 13, 2013)

Performance table (as of Sep 13, 2013)

Portfolio Name 1 Week
Return
YTD
Return
1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Vanguard ETFs Tactical Asset Allocation Moderate 1.5% 5.2% 6.9% 92.2% 8.6% 93.7% 9.5% 80.6%
Vanguard ETFs Strategic Asset Allocation – Equal Weight Moderate 1.7% 4.1% 5.7% 79.2% 7.1% 62.4% 6.3% 34.5%
Five Core Asset ETF Benchmark Tactical Asset Allocation Moderate 1.5% 5.5% 4.8% 67.6% 5.9% 68.6% 8.1% 76.7%
Five Core Asset ETF Benchmark Strategic Asset Allocation – Equal Weight Moderate 1.7% 3.4% 3.8% 46.9% 5.5% 44.3% 5.7% 28.6%

One can see that by providing more choices than just a merely five core asset ETFs, Vanguard ETFs can be used to construct investment portfolios that improve performance. Both TAA and SAA portfolios outperform their counterparts.

Disclosure:

MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.