Yahoo Finance How to Build a Fidelity Portfolio With ETFs
Save on commission fees with this portfolio.
One of the most common pieces of advice you'll get when it comes to exchange-traded funds is to go cheap. Low-cost index funds will typically outperform active management because you're not paying a lot in fees. But there's another way to maximize your nest egg's buying power: dodge commissions. Opening brokerages through Vanguard or Fidelity typically comes with perks, such as the ability to trade certain ETFs without commissions. Here's how you can build a basic portfolio through Fidelity, which offers commission-free ETFs plus 70 funds from iShares.
iShares Core S&P 500 ETF (IVV)
The iShares Core S&P 500 ETF (IVV) allows you to invest in the Standard & Poor's 500 index, giving you access to 500 American companies such as Apple (AAPL) and Exxon Mobil Corp. (XOM) that represent a good blend of stability, growth and income. The IVV is one of three ETFs that invest in the S&P 500 -- the Vanguard S&P 500 ETF (VOO) and the SPDR S&P 500 ETF (SPY) are the others. The IVV has the advantage of being commission-free if traded within a Fidelity brokerage account.
Expenses: 0.07 percent.
iShares S&P Midcap 400 Growth ETF (IJK)
Invest in the market's sweet spot with the iShares S&P Midcap 400 Growth ETF (IJK), a collection of "growthy" mid-capitalization stocks. Mid-caps have market capitalization between $2 billion and $10 billion, and they feature better growth propositions than large caps but more stability and access to capital than small caps. Morningstar data shows that mid-caps have better risk-adjusted returns over the past 15 years. Top holdings include Alaska Air Group (ALK) and Foot Locker (FL), both which are up about 25 percent this year.
Expenses: 0.25 percent.
iShares Core MSCI EAFE ETF (IEFA)
The iShares Core MSCI EAFE ETF (IEFA) offers exposure to developed-country stocks in Europe, Australia, Asia and the Far East. The term "developed" refers to mature economies that offer far more stability than developing economies. IEFA holds big, blue-chip stocks like Nestle (NSRGY) and Sanofi (SNY) that help power a dividend of roughly 2.8 percent. But note that roughly 70 percent of the fund is invested in just five countries: Japan, the U.K., France, Switzerland and Germany. That's not necessarily a bad thing -- just know what you're buying.
Expenses: 0.12 percent.
iShares Core MSCI Emerging Markets ETF (IEMG)
The iShares Core MSCI Emerging Markets ETF (IEMG) is meant to provide the growthier part of your international holdings via "emerging" markets. This includes countries featuring burgeoning populations and companies with loads of growth potential, but also a great deal more risk, like geopolitical uncertainty and less regulation of markets. IEMG is heavily exposed to China, South Korea, Taiwan and India. While these economies are "emerging," IEMG still invests in some big, well-known companies such as Samsung (SSNLF) and Taiwan Semiconductor Manufacturing Co. (TSM).
Expenses: 0.18 percent.
Fidelity Total Bond (FBND)
If you're looking for a one-stop shop that will provide you with bond coverage without having to break a mental sweat, Fidelity Total Bond (FBND) has you covered. FBND invests in a combination of government, corporate, mortgage and municipal debt across numerous durations, with an extremely heavy (80 percent-plus) bent to the United States. FBND also has a heftier lean toward corporate debt than many "total" bond funds, helping result in a fairly substantial yield of 3.7 percent. This is fixed income, plain and simple.
Expenses: 0.45 percent.
Expand your horizons with specialty funds.
Past your portfolio of core holdings are specialized funds to provide either a boost in growth or income. The Fidelity MSCI Health Care Index ETF (FHLC) is a play on the explosive growth of the health care sector via the Big Pharma, insurance, medical and other health care stocks. The iShares Core High Dividend ETF (HDV) holds high-yielding companies such as Exxon Mobil and AT&T (T). And the iShares U.S. Preferred Stock ETF (PFF) yields more than 6 percent. Preferred stocks are a stock-bond "hybrid" that delivers substantial yield.
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