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.