Low Cost No Commission ETF Portfolios

by | Portfolio Management

Arbor Investment Planner offers two real-time low cost no commission Exchange Traded Fund (ETF) Portfolios. Each portfolio has it’s own low cost Newsletter. The goal is to assist investors with smaller or starter portfolios in their portfolio management decisions. I want you learn how to invest conservatively by making good choices and not depending on chance (gambling) from now on.

Both ETF portfolios consist entirely of funds that are ultra low fee and trade commission free at Fidelity Investments. These portfolios are especially beneficial for the starter investor and can be easily duplicated by investors with $2500 or even less.

ETF Portfolios

The Arbor ETF Conservative (AETFC) is a global investment universe portfolio employing an adaptive asset allocation, exclusively using value investing strategies. These are the same proven principles I use in the ultra successful AAAMP Value Portfolio.

Bull vs. Bear

The Arbor ETF Aggressive (AETFA) is a global investment universe portfolio employing an adaptive asset allocation with value investing strategies and momentum metrics. The goal is to be more heavily invested in equities when the long term trend is higher prices and more heavily in conservative assets when the equity trend is lower prices. The value investing strategies are the same proven principles I use in the ultra successful AAAMP Value Portfolio.

This aggressive portfolio will require more trading than the Arbor ETF Conservative and incur greater risk. Of course it may produce much higher returns when equities are rising.

What is an ETF?

An Exchange Traded Fund (ETF) is an investment vehicle; a hybrid of mutual funds, and closed-end funds. ETFs hold a basket of assets such as stocks, bonds, or commodities; and trade on a market exchange so they can be traded anytime stocks trade. Most ETFs track a specific index and trade very close to their underlying value (net asset value).

ETF Advantages

ETF investing advantages are lower costs, instant diversification, liquidity, tax efficiency, sector investing, the ability to purchase in small amounts, and the availability of a wide variety of alternative, and even exotic, investments.

Lower Costs

Since ETFs trade like stocks, you can buy a diversified portfolio with the same low commission (typically $6 – $10) as a stock. Also, ETFs typically have lower expense ratios than mutual funds.

All the funds used in the Arbor ETF Portfolios are ultra low free and trade commission free at Fidelity Investments. The only caveat is you must hold the funds for at least 30 days to get commission free trading.

Instant Diversification

There are now hundreds of ETFs trading on U.S. stock exchanges. The variety is deep and wide, covering all major indices, sectors, industries, sizes (i.e. large cap, mid-cap, small-cap, micro-cap, etc.), strategies (growth, value, etc.), international (i.e. developed, emerging, and frontier markets), specific countries, and even exotic ETFs (commodities, short or bear funds, and leveraged funds).

There are also many ETFs in the income area. Bond ETFs include different terms (long, mid, short, etc.), various levels of quality (treasury, corporate, high-yield, etc.) and regions (United States, individual countries, emerging markets, etc.).

The Arbor ETF funds use a global universe of stock, bond, and real estate funds from which to choose the funds with the best value at any particular time.

Liquidity

ETFs trade on a market exchange so they can be traded (intraday) anytime stocks trade, not just at the end of the day. This can be an important benefit when volatility is high.

Tax Efficiency

Since most ETFs are not actively managed, but are programmed to follow a specific index, they don’t have high capital gains and income that are required to be passed on to owners each year. This means investors have more control over when they incur taxes.

Sector Investing

ETFs can segment to very specific or targeted sectors of the economy. This allows investors to have a diversified position in a small slice of a sector where they want exposure.

Can Be Purchased in Small Amounts

Since ETFs trade like stocks there are advantages for position sizing. Small positions can be purchased (no minimum investment) to scale in or scale out of a position, or take a single small position in a particular ETF.

Available in Alternative Investments

ETFs allow investors to take positions in alternative or even exotic investments that are unavailable in any other form to small investors. New products become available regularly and include ETFs in commodities, hedges, and leveraged long and short positions in indices and sectors.

Optimal Mix - Invest

ETF Disadvantages

In order to get the maximum benefit of investing in ETFs it is important to identify and understand two crucial disadvantages. Fortunately, these shortfalls can be mitigated if investors have a clear comprehension of the disadvantages, and how the solution can help optimize their portfolio.

Over Diversification

Many ETFs participate in over diversification. ETFs are generally not actively managed, but are programmed to follow a specific index. The index, and therefore the ETF, may not own the very best stocks.

It may be more advantageous to buy a limited number of the best companies rather than own the entire index. This would be particularly true with ETFs that track indices with a small universe of stocks such as a specific sector or industry.

Lack of Rebalancing

ETFs don’t rebalance their portfolios. Remember, most ETFs are programed to track an index. In an index, as the winners increase in price they become a larger percentage of an index. At the same time some stocks decline in price and become a smaller percentage of an index. By owning the index, or ETF tracking the index, you may own more of expensive over priced stocks and less of the bargain underpriced or value stocks.

Mitigating ETF Investing Disadvantages

Both of the above disadvantages can be mitigated by investing in a combination of ETFs and individual stocks. There are circumstances that are appropriate for ETFs and circumstances that are appropriate for individual stocks.

Smaller investors who use ETF funds exclusively to start, might consider adding individual stocks as their portfolio grows. I recommend starting this process once an investors portfolio reaches $25 – $35,000.

ETFs

ETFs are the perfect investment vehicle for beginning investors, smaller portfolios, and larger portfolios that want significant diversification in a particular geographical area, sector, or industry. Used wisely they can be a valuable tool to lower risk and/or improve portfolio returns.

ETF Portfolios

Low Cost No Commission ETF Portfolios are the best approach for investors to get started with small investment amounts. Each Portfolio starts with a 10 Day Free Trial.

The Arbor ETF Conservative Newsletter is really targeted to help the small investor! I want to keep your expenses LOW!

That’s right, you pay nothing for 10 days. After that your cost will be $24 per year! You may cancel at anytime, so you take zero risk!

But this is a limited time offer. Become a charter subscriber and lock in these low rates forever.

ETF Portfolios

Value Investing Portfolio Management Guides

ETF Starter Portfolios - Arbor ETF Conservative Portfolio & Arbor ETF Aggressive Portfolio

Dividend Value Builder - DVB Analyzer Newsletter & DVB Portfolio Newsletter

AAAMP Value Newsletter - Global Deep Value Asset Allocation Portfolio

Learn More

Disclaimer
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.

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