Fidelity has a suite of commission free ETFs. We use these ETFs to construct an investment plan  Fidelity Commission Free ETFs. The plan consists of 65 funds. These funds enable participants to gain exposure to 5 major assets: US Equity, Foreign Equity, Emerging Market Equity, REITs, Fixed Income.

 

Asset Class Ticker Name
REAL ESTATE IYR iShares Dow Jones US Real Estate
Global Real Estate IFGL iShares FTSE EPRA/NAREIT Dev RE ex-US
Latin America Stock ILF iShares S&P Latin America 40 Index
DIVERSIFIED EMERGING MKTS BKF iShares MSCI BRIC Index
India Equity INDY iShares S&P India Nifty 50 Index
DIVERSIFIED EMERGING MKTS FM iShares MSCI Frontier 100 Index
DIVERSIFIED EMERGING MKTS EEMS iShares MSCI Emg Mkts Small Cap
DIVERSIFIED EMERGING MKTS EEMV iShares MSCI Emerging Mkt Min Vol Index
DIVERSIFIED EMERGING MKTS EEME iShares MSCI Emerging Markets EMEA
DIVERSIFIED EMERGING MKTS DVYE iShares Emerging Markets Dividend
DIVERSIFIED EMERGING MKTS IEMG iShares Core MSCI Emerging Markets ETF
China Region MCHI iShares MSCI China Index
Foreign Large Value IDV iShares Dow Jones Intl Select Div Idx
EUROPE STOCK IEV iShares S&P Europe 350 Index
Foreign Small/Mid Blend SCZ iShares MSCI EAFE Small Cap Index
JAPAN STOCK EWJ iShares MSCI Japan Index
PACIFIC/ASIA EX-JAPAN STK AAXJ iShares MSCI All Country Asia ex Jpn Idx
WORLD STOCK ACWI iShares MSCI ACWI Index
Foreign Large Value EFAV iShares MSCI EAFE Min Volatility
Foreign Large Blend IXUS iShares Core MSCI Total Intl Stk ETF
Foreign Large Blend IEFA iShares Core MSCI EAFE ETF
MISCELLANEOUS SECTOR PFF iShares S&P U.S. Preferred Stock Index
Natural Resources VEGI iShares MSCI Global Agriculture Prod
Natural Resources PICK iShares MSCI Gbl Sel Metals & Mining Prd
EQUITY PRECIOUS METALS SLVP iShares MSCI Global Silver Miners
EQUITY PRECIOUS METALS RING iShares MSCI Global Gold Miners
Small Growth IJT iShares S&P SmallCap 600 Growth
LARGE GROWTH IVW iShares S&P 500 Growth Index
Mid-Cap Growth IJK iShares S&P MidCap 400 Growth Index
LARGE BLEND ITOT iShares Core S&P Total US Stock Mkt ETF
MID-CAP BLEND IJH iShares S&P MidCap 400 Index
SMALL BLEND IJR iShares S&P SmallCap 600 Index
MID-CAP VALUE IJJ iShares S&P MidCap 400 Value Index
LARGE BLEND IVV iShares S&P 500 Index
MID-CAP VALUE DVY iShares Dow Jones Select Dividend Index
LARGE BLEND OEF iShares S&P 100 Index
LARGE VALUE IVE iShares S&P 500 Value Index
SMALL VALUE IJS iShares S&P SmallCap 600 Value Index
SMALL BLEND IWC iShares Russell Microcap Index
LARGE VALUE USMV iShares MSCI USA Min Volatility
Muni New York Long NYF iShares S&P NY AMT-Free Municipal Bd
Inflation-Protected Bond TIP iShares Barclays TIPS Bond
Long-Term Bond ILTB iShares Core Long-Term US Bond ETF
Muni National Short SUB iShares S&P S/T Natnl AMT-Free Muni Bd
Long-Term Bond LQD iShares iBoxx $ Invest Grade Corp Bond
Muni California Long CMF iShares S&P CA AMT-Free Municipal Bd
Intermediate Government AGZ iShares Barclays Agency Bond
Intermediate-Term Bond MBB iShares Barclays MBS Bond
Emerging Markets Bond EMB iShares JPMorgan USD Emerg Markets Bond
Muni National Long MUB iShares S&P National AMT-Free Muni Bd
SHORT GOVERNMENT SHY iShares Barclays 1-3 Year Treasury Bond
LONG GOVERNMENT IEF iShares Barclays 7-10 Year Treasury
Intermediate-Term Bond AGG iShares Barclays Aggregate Bond
High Yield Bond HYG iShares iBoxx $ High Yield Corporate Bd
Intermediate-Term Bond GVI iShares Barclays Interm Govt/Credit Bond
LONG GOVERNMENT TLT iShares Barclays 20+ Year Treas Bond
WORLD BOND IGOV iShares S&P/Citi Intl Treasury Bond
WORLD BOND ISHG iShares S&P/Citi 1-3 Yr Intl Treasury Bd
WORLD BOND ITIP iShares Intnl Inflation-Linked Bond Fund
Short-Term Bond FLOT iShares Floating Rate Note
Intermediate-Term Bond ISTB iShares Core Short-Term US Bond ETF
Intermediate Government GOVT iShares Barclays U.S. Treasury Bond
Intermediate Government GNMA iShares Barclays GNMA Bond
Inflation-Protected Bond STIP iShares Barclays 0-5 Year TIPS Bond
Emerging Markets Bond LEMB iShares Emerging Markets Local Cur Bond

 

Asset Class Number of funds
Balanced Fund 0
REITs 2
Fixed Income 26
Commodity 0
Sector Fund 4
Foreign Equity 7
Emerging Market Equity 9
US Equity 14
Other 3
Total 65

A few comments

  • The plan covers all of the major asset classes. This gives enough candidate funds to construct a diversified portfolio using asset allocation strategies. 
  • The plan uses iShares ETFs. Many of them have long history. However, They are more expensive than others such as similar ETFs offered by Vanguard or Schwab. 
  • Some of these ETFs are not very liquid. For example, most iShares S&P stock style funds (large, mid and small cap growth, value and blend funds) are less liquid than those iShares Russell stock funds such as IWM, IWN, IWO etc. 

Portfolio Discussions

We have monitored the following investment model portfolios using  two asset allocation strategies: strategic and tactical asset allocation strategies (SAA and TAA ). These model portfolios were constructed using the Fidelity commission free ETFs at the time and MyPlanIQ updates these model portfolios every day. They have been in public since 2010. 

The following chart and table shows how these portfolios have performed: 

Portfolio Performance Comparison

Ticker/Portfolio Name 1 Week
Return*
YTD
Return**
1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe 10Yr AR 10Yr Sharpe
Fidelity Commission Free ETFs Strategic Asset Allocation – Equal Weight Moderate -0.3% 3.1% 6.3% 0.86 5.9% 0.58 13.2% 0.96 7.2% 0.46
Fidelity Commission Free ETFs Strategic Asset Allocation – Optimal Moderate -0.1% 7.9% 11.3% 1.65 7.8% 0.74 14.9% 1.05 7.3% 0.44
Fidelity Commission Free ETFs Tactical Asset Allocation Moderate 0.2% 9.6% 12.4% 1.69 8.5% 1.1 9.8% 0.97 9.8% 0.81
VFINX (Vanguard 500 Index Investor) 0.4% 28.8% 32.4% 2.86 17.0% 1.01 20.2% 0.97 7.8% 0.33
VBINX (Vanguard Balanced Index Inv) 0.2% 16.2% 18.5% 2.67 11.3% 1.16 15.1% 1.21 7.1% 0.5

*: NOT annualized

**YTD: Year to Date

We note that all of portfolios under performed S&P 500 index (VFINX) and Vanguard 60% stocks and 40% bond balance index fund (VBINX) in the past 1, 3 and 5 years. This is due to the fact that US stocks have performed exceptionally well in these periods. However, all of them have done better for the last 10 years. 

The equal weight portfolio was hurt recently because of the weakness in emerging market stocks and commodities. 

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.