Picking Funds for Your Core

Your core funds do most of the work, so choose them carefully. Here is what to look for: broad coverage, low costs, low turnover and a simple structure, plus how fees add up over decades.

What a good core fund looks like

• Broad: it tracks a whole market, such as the total U.S. market, the S&P 500 or all international developed and emerging markets.
• Cheap: expense ratios for broad index funds can be well under 0.10% a year.
• Tax-efficient: low turnover means fewer taxable distributions in regular accounts.
• Large and liquid: plenty of assets and trading volume, with tight spreads for ETFs.
• Simple: no leverage, no complex strategy, easy to understand.

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