A strong flexible portfolio begins with the core. It provides a stable foundation to pursue specific investment goals—from managing risk and generating income to growing capital through diversification.
But core investing shouldn’t be costly. Instead, investors should have confidence that they aren’t overpaying for returns in the largest part of their portfolio.
The best core holdings offer:
These attributes may make ETFs an ideal core holding.
Asset allocation—the mix of stocks, bonds and cash in a portfolio—explains 90% of the variance in portfolio returns.2 Changing the weighting of these investments alters the risk profile of a portfolio, and therefore the potential return.
With as few as three low-cost SPDR Portfolio ETFs, investors can easily build a diversified core portfolio of stocks and bonds. From conservative to aggressive allocations, the following five risk-based examples can be tailored to meet different investment objectives—each with a weighted-average cost just under 4 basis points (bps).
It's simple: high costs erode returns. So the largest part of your portfolio should never be the most expensive. Every little basis point counts.
SPDR Portfolio ETFs are diversified and tax-efficient stock and bond index funds, available from as little as 3 bps. Covering US equity, international equity and fixed income asset classes, they are designed to help investors allocate for the long-term. They have a median cost 93% lower than the median US-listed mutual fund.3
SPDR Portfolio ETFs to choose from
The median cost for SPDR Portfolio ETFs
Lower than the median US-listed mutual fund 3
See the full range of 22 low-cost SPDR Portfolio ETFs, starting from just 3bps.
An effective core may differ from one investor to the next, but four construction principles apply to all.
Leave the asset allocation to us! SPDR ETFs have ready-made portfolios that include our low-cost range.
1State Street Global Advisors per Morningstar, as of 01/24/2020. Lowest cost in the industry is per Morningstar, as of 01/16/2020. Based on US-listed ETFs in the Small Blend, Mid-Cap Blend and Large Cap Blend Morningstar categories, respectively.
2Gary P. Brinson, L. Randolph Hood, Gilbert L. Beebower, "Determinants of Portfolio Performance", Financial Analyst Journal Vol.42 Issue 4 1986.
3Morningstar, State Street Global Advisors, as of 12/31/2019. The median expense ratio of the 22 SPDR Portfolio ETFs compared to the median expense ratio of all US-listed mutual funds which include both active and passive products. The average expense ratio of all passive US-listed mutual funds is 0.25%. SPDR Portfolio ETFs are 76% lower than the average passive US-listed mutual fund.
State Street Global Advisors Funds Distributors, LLC does not offer securities trading. SPDR ETFs may not be available for trading on a commission free basis on the brokerage platform on which you trade.
Important Risk Information
Risk associated with equity investing includes stock values which may fluctuate in response to the activities of individual companies and general market and economic conditions.
There can be no assurance that a liquid market will be maintained for ETF shares.
Non-diversified funds that focus on a relatively small number of securities tend to be more volatile than diversified funds and the market as a whole.
Diversification does not ensure a profit or guarantee against loss.
Investments in small-sized companies may involve greater risks than in those of larger, better known companies. Returns on investments in stocks of small companies could trail the returns on investments in stocks of larger companies.
Foreign investments involve greater risks than US investments, including political and economic risks and the risk of currency fluctuations, all of which may be magnified in emerging markets.
Bond funds contain interest rate risk (as interest rates rise bond prices usually fall); the risk of issuer default; issuer credit risk; liquidity risk; and inflation risk.
Returns on investments in stocks of large US companies could trail the returns on investments in stocks of smaller and mid-sized companies.
The values of debt securities may decrease as a result of many factors, including, by way of example, general market fluctuations; increases in interest rates; actual or perceived inability or unwillingness of issuers, guarantors or liquidity providers to make scheduled principal or interest payments; illiquidity in debt securities markets; and prepayments of principal, which often must be reinvested in obligations paying interest at lower rates.
Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.