Index ETF versus Managed Retirement Fund | Investment Moats Skip to Content

Index ETF versus Managed Retirement Fund

Andrew Hallam of Millionaire Teacher fame this morning have a piece on a seminar that he gave to expatriate teachers in Singapore American Schools telling them they can thrash Managed Unit Trusts or Mutual Funds with buying just 3 Index ETFs:

The indexed portfolio was split into thirds:

  • 33% in Vanguard’s U.S. total stock market index
  • 33% in Vanguard’s international stock market index
  • 33% in Vanguard’s total bond market index

I rebalanced the portfolio once a year, taking roughly 10 minutes out of my day.  Every other year, I increased the bond market component as my hypothetical investor grew older (bonds currently represent 38% of the total portfolio).

The returns since then, through one large bear market and its subsequent rebound looks great. What Andrew did should have followed what the American Retirement Fund do but how come his performance is better?

My guess is that it is due to low cost. By not paying large fees as sales charges and high expense ratio, the performance is better.

Index Investing is not new in Singapore. You can index invest Singapore by buying the STI ETF (Read here)

Read the full piece at Andrew’s [website]

Not all markets have bounce back to 2007 highs except Singapore, US, Mexico and Sweden
← Previous
Investment Moats Portfolio Update September 2012
Next →

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This site uses Akismet to reduce spam. Learn how your comment data is processed.