Fidelity as custodian
Block Asset Class Fund Name Ticker Exp ratio Min Invest
1 Domestic Total Market Fidelity Spartan Total Market Index FSTMX 0.09% $10,000
2 TIPS Fidelity Inflation Protected Securities (m) FINPX 0.45% $2,500
3 InternationalTotal Market Fidelity Spartan Total International Market Index FSIIX 0.10% $10,000
4 InternationalBonds American Century International Bond (m) BEGBX 0.82% $2,500
5 REITs Vanguard REIT (etf) VNQ 0.12% $0
6 Energy Vanguard Energy (etf) VTE 0.26% $0
7 Domestic Large Value VanguardValue (etf) VTV 0.11% $0
8 Domestic Small Value Vanguard Small Cap Value (etf) VBR 0.12% $0
9 Emerging Markets Vanguard Emerging Markets (etf) VWO 0.30% $0
10 International Value iShares MSCI EAFE Value (etf) EFV 0.40% $0
(m)indicates a managed fund

Because Fido has limited index fund choices, more blocks will have to come from the ETF universe.It would also be possible to do nearly the entire portfolio with ETFs and still have some freedom of substitution. The only mutual fund is the Am Century International Bond fund which is expensive and managed. I’m hoping an ETF alterative will be launched this year.

All ETF portfolio (all online brokers)   Source 4: Alternative ETFs
Fund Name Ticker Exp. Ratio   Fund Name Ticker Exp. Ratio
Vanguard Total Market Index VTI 0.07%   Powershares RAFI 1000 PRF 0.60%
iShares TIPS TIPS 0.20%   none n/a n/a
iShares EAFE EFA 0.35%   none n/a n/a
none n/a n/a   none n/a n/a
Vanguard REIT VNQ 0.12%   iShares Cohen & Steers Realty CLF 0.35%
Vanguard Energy VDE 0.26%   Powershares FTSE RAFI Energy PRFE 0.60%
Vanguard Value VTV 0.11%   Powershares RAFI 1000 PRF 0.60%
Vanguard Small Cap Value VBR 0.12%   Powershares RAFI 1500 PRFZ 0.60%
Vanguard Emerging Markets VWO 0.30%   none n/a n/a
iShares MSCI EAFE Value EFV 0.40%   WisdomtreeDIEFA DWM 0.48%

There are several differences between the Building Block portfolios and the AssetBuilder portfolios. First, AssetBuilder uses only academically researched and proven asset classes. It considers energy a sector, not an asset class.

AssetBuilder uses relatively short maturity fixed income funds from Dimensional Funds. This reduces volatility. Their funds include short term global funds which are much closer to what I’d like to do than American Century International Bond fund.

Finally, the Dimensional Funds are, I believe, the best vehicles to capture the additional returns from the Fama/French factors— value and small size—because they were specifically CREATED to capture those factors.

Here is a past performance comparison of the 10 Speed and Building Block 12 portfolios, along with mutual fund benchmarks. As you can see, BB12 trumps the 10 Speed and both trump the Morningstar category averages.

Will that lead continue in the future? I don’t know. What I think we can be certain of is that the immediate past was a period of above average returns and below average risk, as measured by standard deviation.

Portfolio Std. Dev. 1 year 3yrs 5yrs
DFABB12 8.83 24.05 19.71 18.53
10Speed CP 8.69 20.54 17.05 15.40
Difference +.14 +3.51 +2.66 +3.13
Avg.World Allocation fund 8.54 16.50 13.34 12.24
Avg.Moderate Allocation fund 8.05 11.26 8.37 6.30