I've been investing in ETFs according to my strategy for almost a year; everything looks good but one thing bothers me.
My local stock exchange offers only three ETFs (tracking S&P, DAX and WIG20). That's not enough for my investment / diversity goals, hence I also buy ETFs from NYSE / NASDAQ (REITs, small caps and bonds). However, the brokerage fees are significantly higher for the foreign markets:
Local mkt fees: 0.29% of transaction, min. ~$1
Foreign mkt fees: 0.29%, min ~$10
Now, I've been buying foreign papers every other or third month to minimize the effect of fees. Unfortunately, the analysis showed that the fees were still robbing me of (potential) returns rather significantly. Moreover, if I have three US ETFs and buy one of them every three months in a round-robin fashion, that means each ETF is being bought only once every nine months!
That sounds like bad dollar-cost averaging strategy.
I had considered buying local mutual funds instead and have run a simulation. Turned out that just after two years I would be better off buying foreign ETFs - the funds have much higher management fees than ETFs!
So, to sum it up, what would be the best strategy / approach to:
- Diversity, both geographical and asset-class
- Good DCA (dollar-cost averaging)
- Low management fees (I'm thinking long-term)
- High purchase / sale fees that diminish my returns