Re-balance Cycle Reminder All MyPlanIQ’s newsletters are archived here.

For regular SAA and TAA portfolios, the next re-balance will be on Tuesday, January 3, 2017. You can also find the re-balance calendar for 2016 on ‘Dashboard‘ page once you log in.

As a reminder to expert users: advanced portfolios are still re-balanced based on their original re-balance schedules and they are not the same as those used in Strategic and Tactical Asset Allocation (SAA and TAA) portfolios of a plan.

Please note that we now list the next re-balance date on every portfolio page.

Index ETFs Review

In our brokerage specific investment plans, we mostly use index ETF to construct portfolios. It’s our intention to review these funds regularly. Last time, we reviewed them in November 2, 2015: Broad Base Index Core ETFs Review

US Equity

The following table compares broad base US stock index ETFs: 

US Equity Index ETF Performance Comparison (as of 11/25/2016):

1Yr AR 3Yr AR 5Yr AR 5Yr Sharpe 10Yr AR
IVV (iShares Core S&P 500) 10.4% 8.2% 9.3% 16.1% 1.21 6.9%
SCHB (Schwab US Broad Market ETF) 10.7% 8.0% 8.8% 16.1% 1.2  
VTI (Vanguard Total Stock Market ETF) 11.4% 8.7% 9.0% 16.3% 1.21 7.2%
SPY (SPDR S&P 500 ETF) 10.3% 8.1% 9.2% 16.1% 1.22 6.9%
VOO (Vanguard S&P 500 ETF) 10.5% 8.2% 9.1% 16.1% 1.21  

See detailed comparison >>

The three ETFs that track S&P 500 are pretty comparable, indicating that for this widely tracked large cap company stock index, ETFs are very mature. VTI (Vanguard Total Stock Market ETF) has been better than Schwab’s broad base ETF SCHB. Furthermore, the recent small cap strength and its long term strength makes VTI have done better than large cap indexes such as S&P 500 SPY, VOO alike. 

We also use several dividend and low volatility ETFs: 

Portfolio Performance Comparison (as of 11/25/2016):
1Yr AR 3Yr AR 5Yr AR 5Yr Sharpe 10Yr AR
SPLV (PowerShares S&P 500 Low Volatility ETF) 8.2% 8.0% 10.0% 14.2% 1.24  
USMV (iShares MSCI USA Minimum Volatility) 8.7% 8.9% 10.4% 14.9% 1.39  
VYM (Vanguard High Dividend Yield ETF) 14.1% 12.8% 9.7% 16.0% 1.32 7.2%
VIG (Vanguard Dividend Appreciation ETF) 11.4% 10.0% 0.9% 13.3% 0.65 7%
DVY (iShares Select Dividend) 19.4% 17.6% 10.9% 16.0% 1.36 6.1%
SDY (SPDR S&P Dividend ETF) 18.7% 16.8% 10.8% 16.0% 1.32 7.8%
SCHD (Schwab US Dividend Equity ETF) 14.5% 13.2% 9.1% 15.4% 1.31  
FVD (First Trust Value Line Dividend ETF) 16.8% 15.6% 11.6% 16.0% 1.42 8.3%

See detailed comparison >>

The two low volatility ETFs are again comparable. However, Vanguard’s two dividend ETFs have lagged behind other dividend ETFs. This is mostly due to the overweight on energy and financial dividend paying companies by the other four ETFs (DVY, SDY, SCHD and FVD). We added FVD to the comparison because we are curious how this famed ETF with long history has done. We stopped using this ETF as it has low trading volume. Schwab dividend ETF has somewhat lagged behind DVY and SDY. In general, we believe using these ETFs as candidate funds and rotating them based on their trend score can add value to a portfolio. Furthermore, we are still a believer in the two Vanguard’s dividend ETFs because of their solid indexing history and low cost. 

International Developed Market Stock ETFs

We again find that there is much more dispersion among international developed market stock broad base ETFs: 

International developed market stock ETFs (as of 11/25/2016):
1Yr AR 3Yr AR 5Yr AR 5Yr Sharpe 10Yr AR
IEFA (iShares Core MSCI EAFE) -1.0% -2.8% -1.3%      
SCHF (Schwab International Equity ETF) 0.6% -2.0% -1.7% 6.9% 0.42  
VEA (Vanguard FTSE Developed Markets ETF) 0.2% -2.1% -1.3% 7.9% 0.47  
EFA (iShares MSCI EAFE) -1.3% -3.7% -2.0% 7.4% 0.44 0.8%

See detailed comparison >>

VEA (Vanguard FTSE Developed Markets ETF) has been an undisputed leader in this pack. Schwab’s SCHF has been comparable for the past one year even though it was a laggard previously. We believe this ETF will be fine in the future. However, for other ETFs (IEFA and EFA), we see no reason to use them if one can invest in VEA. 

Emerging Market Stock ETFs 

This year’s data are again showing what we observed last time:

Portfolio Performance Comparison (as 11/25/2016):
1Yr AR 3Yr AR 3Yr Sharpe 5Yr AR 10Yr AR
IEMG (iShares Core MSCI Emerging Markets) 9.7% 3.9% -2.7% -0.14    
SCHE (Schwab Emerging Markets Equity ETF) 12.5% 6.3% -1.7% -0.09 2.2%  
VWO (Vanguard FTSE Emerging Markets ETF) 12.2% 6.2% -1.5% -0.08 2.5% 2.3%
EEM (iShares MSCI Emerging Markets) 10.4% 4.0% -3.3% -0.17 1.6% 1.7%

See detailed comparison >>


  • Vanguard and Schwab ETFs (VWO and SCHE) are the two clear leaders.
  • SCHE is now matching closely with VWO, so we can assume its early underperformance has been largely corrected. 
  • IEMG is clearly not in the same league and very disappointing, especially considering it’s from iShares. 
  • EEM is again a trader’s ETF solely because of its popularity (trading volume). But even in liquidity, VWO is now very comparable with EEM. 

Real Estate ETFs

US Real Estate ETFs Performance Comparison (as of 11/25/2016):

ETF Expense YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR
IYR (iShares US Real Estate) 0.44% 2.8% 4.1% 10.0% 12.0% 2.9%
SCHH (Schwab US REIT ETF) 0.07% 1.1% 3.4% 11.6% 13.0%  
VNQ (Vanguard REIT ETF) 0.12% 3.3% 5.3% 10.8% 12.8% 4.3%
RWR (SPDR Dow Jones REIT ETF) 0.25% 1.1% 3.3% 11.5% 12.8% 3.7%

See detailed comparison >>

Schwab ETF is slightly better than RWR. Both track the same Dow Jones REIT Index, which is the same one RWR is tracking. In terms of expenses, Schwab’s SCHH is way better (smaller) than others. We maintain our preference of VNQ and SCHH over the other two. 

International Real Estate ETFs Performance Comparison (as of 11/25/2016):

1Yr AR 3Yr AR 5Yr AR
IFGL (iShares International Dev Rel Est) -0.4% -1.8% -0.7% 8.0%
RWO (SPDR Dow Jones Global Real Estate ETF) -0.5% -0.0% 6.0% 10.7%
VNQI (Vanguard Global ex-US Real Estate ETF) 1.0% -0.7% 0.5% 9.0%

See detailed comparison >>

We again prefer VNQI in this category. RWO outperformed others because it’s a global REIT fund, thus benefiting from US REITs’ stronger performance. 

Broad Base US Bond Index ETFs

In this category, the oldest and most popular iShares AGG ETF is still slightly better than Vanguard’s popular BND: 

Broad Base US Bond ETF Performance Comparison (as of 11/25/2016):

ETF Expense YTD
1Yr AR 3Yr AR 5Yr AR 10Yr AR
AGG (iShares Core US Aggregate Bond) 0.05% 2.1% 1.9% 2.6% 2.2% 4.1%
SCHZ (Schwab US Aggregate Bond ETF) 0.04% 1.9% 1.8% 2.6% 2.1%  
BND (Vanguard Total Bond Market ETF) 0.06% 2.0% 1.8% 2.5% 1.9%  

Schwab SCHZ is again a laggard, but not so much worse than the other two. Unlike last year, AGG now has lower expense than BND (0.05% vs. 0.06%) while Schwab’s SCHZ has the lowest expense ratio (0.04%). In our opinion, all three ETFs are good enough for the broad base US bond index representation. 

To summarize, most of these ETFs are very comparable but there are some that can be clearly replaced (such as EEM or IYR). Schwab’s ETFs are now formidable competitors. 

Market Overview

US stocks continued to make record high. International stocks recovered somewhat after the Trump election loss. Bonds continued their loss out of investors’ concern on inflation and possible higher borrowing cost in the new administration’s upcoming investment driven economy. As we stated before, there will be many bumps ahead. Furthermore, as the US stocks are highly overvalued, we maintain our cautiously optimistic position.

For more detailed asset trend scores, please refer to 360° Market Overview

As now we have a president elect who promised to challenge the status quo and make substantial structural change (such as infrastructure building), we are now in a wait and see period: as the nation is posed to invest, the most important factor to watch is how productive the investments will be. Simply put, productive investments will result in better return on investment (ROI), tangibly or intangibly. They should also increase productivity that in turns will improve our standard of living. Capital misallocation can result in a higher growth but might not improve the real standard of living, which is the ultimate goal of economic activities.

In terms of investments, U.S. stock valuation is at a historically high level. It is thus not a good time to take excessive risk. However, we remain optimistic on U.S. economy in the long term and believe much better investment opportunities will arise in the future. 

We again would like to stress for any new investor and new money, the best way to step into this kind of markets is through dollar cost average (DCA), i.e. invest and/or follow a model portfolio in several phases (such as 2 or 3 months) instead of the whole sum at one shot. 

Latest Articles

Enjoy Newsletter

How can we improve this newsletter? Please take our survey 

–Thanks to those who have already contributed — we appreciate it.

Any investment in securities including mutual funds, ETFs, closed end funds, stocks and any other securities could lose money over any period of time. All investments involve risk. Losses may exceed the principal invested. Past performance is not an indicator of future performance. There is no guarantee for future results in your investment and any other actions based on the information provided on the website including, but not limited to, strategies, portfolios, articles, performance data and results of any tools. All rights are reserved and enforced. By accessing the website, you agree not to copy and redistribute the information provided herein without the explicit consent from MyPlanIQ.