Gyroscopic Investing

I was curious if there was any new competition in lowering stock ETF expenses and found that there has been from State Street

https://www.ssga.com/us/en/individual/e ... 0-etf-splg

Expense Ratio Reduction: On August 1, 2023, the gross expense ratio for the SPDR® Portfolio S&P 500 ETF (SPLG) has been reduced to 0.02% from 0.03%, making it the lowest cost large-cap blend S&P 500 ETF offering.1

Thanks!

Good to see more competition! Vanguard's VTI is still at 0.03% and I don't expect them to reduce the ER further as VTI has enjoyed big inflows last year. SSGA ETFs can be quite handy for those preferring ETFs.

Those with Fidelity accounts can invest in Fidelity's zero-expense funds FNILX (large cap) and FZROX (TSM). Understandably, these funds use Fidelity's own indexes, but the portfolios and performance are fairly similar to the index funds based on Large Cap/S&P 500 or Total Stock Market indexes respectively and you can't beat 0% ER. Fidelity also offers index funds based on traditional indexes with super low ERs, for example FXAIX (S&P 500) and FSKAX (TSM) at 0.015%.

voo actually had a better return in 2023 than splg despite a slightly higher fee. both are s&p 500 funds.

26.32 for voo , 26.24 for the lower cost splg.

as i always say lower expenses don’t always mean much since so many other factors are involved .

i have been experimenting with a leveraged risk parity portfolio called the carolina reaper .

by etf standards the expenses on these leveraged funds and the managed commodities fund are pretty high .

i went as far back with these funds as i could in portfolio visualizer.

i was able to go back to jan 2020 , so almost 4 years

a 60/40 consisting of 60% voo (s&p fund )and 40% bnd ( total bond fund ) took 100k and turned it in to 126,130 , a cagr of 6.11%

the 60/40 carolina reaper took a 100k grew it to 136,260 ,a cagr of 8.22%

BUT GET THIS

WORST DOWN YEAR WAS MINUS 2.57% for the reaper with a worst draw down of 9.45%

the conventional 60/40 had a worst year of minus 16.16 % and a worst draw down of 20.15%

HOLY CRAP , WHAT A DIFFERENCE .

Boy this is showing a lot of promise as we went thru some awful times as well as high inflation and rising rates.

it really wants to compel one to go whole hog but i don’t have the balls yet. lol

but it certainly looked like that magical portfolio we all dream about if we don’t want 100% equities

i mean down a mere 2.57% …that’s incredible while a 60/40 was down 16.16% , yet beat it by over 2% in gains

keep in mind these returns include all expenses and these leveraged funds are not anywhere near as cheap as voo or bnd .

so like i always say , there is so much more when portfolios are involved then lowest costs of the individual components

that was vanguard marketing brainwashing investors.

expenses for dbmf .85% , upro .92 tyd 1.1%

voo .03. bnd .03

yet including all expenses the reaper not only averaged more then 2% a year more but was lower risk in every respect

yet how often here is the advice to buy low cost index funds as the primary criteria or only criteria … so marketing vs real life can be very different, and at the end of the day portfolio construction is key

I do have some of the Fidelity zero expense fund and it has been fine in performance but didn't compare it with vanguard recently.

After watching this bogleheads interview with vanguard fund manager, they did a good job selling me on their funds even if expense ratio is a bit more.

The difference being if they are able to beat the index at all with strategic selling and buying inside the fund then it stays in the fund. For profit funds would keep this themselves I expect.

Interview:
https://youtu.be/f_AK3pjUAiM

the zero fee fidelity funds are not the same benchmark as an s&p fund or total market fund .

they created their own index to avoid paying licensing fees , which while close in performance isn’t exactly the same as the index holds.

not that is a good or bad thing but it is just different

that came in at 27.45% for 2023 and did better then the s&p funds , however ,different index