π 4. ETF Selection & Tools Guide (Selection & Tools) β
"Even a well-designed strategy depends on the quality and suitability of the assets used to implement it."
I am sharing the four criteria I use to compare long-term ETF and stock candidates, together with my research and backtesting tools. These criteria do not prevent losses or guarantee returns; they are a personal checklist for making and recording decisions consistently.
Verification order and limits
I verify an ETF's index, fee, and risks on the provider's own page rather than a search summary: VOO β Vanguard, SCHD β Schwab, and SPMO β Invesco. AUM, fees, and holdings change; the figures below are not permanent selection thresholds or guarantees of future performance.
ποΈ 4 Principles for Choosing a Good ETF β
There are thousands of ETFs listed on the US stock market. The clear filters I use to weed out the noise and find quality products that can be safely and mechanically accumulated for over 10 years are as follows:
1. Asset Under Management (AUM) & Liquidity β
- Criteria: The Asset Under Management (AUM) should be at least $1B (about 1.3 trillion KRW), with abundant average daily trading volume.
- Reason: Small-scale ETFs with low trading activity incur unfavorable transaction costs (Slippage) due to the bid-ask spread when buying and selling. In extreme cases, the fund may face the worst-case scenario of liquidation (delisting), so I primarily enter large-cap assets.
2. Expense Ratio β
- Criteria: For general index (passive) ETFs, aim for an annual fee of 0.1% or less, and for quant strategies like momentum, prefer 0.2% or less.
- Reason: In the compounding snowball rolling over 10 or 20 years, fees are the most terrifying cancer cells that erode long-term returns.
3. Issuer Reliability (Issuer) β
- Criteria: Prioritize products from the world's top-tier asset managers: Vanguard, BlackRock, State Street, and Invesco.
- Reason: Through economies of scale in business, they lower fees to the marginal level, and the risk of the asset manager's bankruptcy or a bank run is virtually zero.
4. Tracking Error & Premium/Discount β
- Criteria: The tracking error should be 0.05%~0.1% or less, and there should be almost no discrepancy between the Net Asset Value (NAV) and the actual trading price.
- Reason: This is an essential quality indicator of the fund, showing whether the ETF is faithfully tracking the underlying asset index it is supposed to replicate without error.
ποΈ Basic Recommended ETF Lineup for Core Portfolio β
π‘ Why did I choose these specific 3 ETFs (VOO, SCHD, SPMO) out of thousands? For the fierce thought process and academic proofs behind this selection, please be sure to read the series starting from π Evolution of Investment Prologue: The Ultimate Survival Formula.
| Asset Category | Representative ETF Ticker | Issuer | Expense Ratio | Core Features |
|---|---|---|---|---|
| S&P 500 Index Tracking | VOO | Vanguard | 0.03% | The backbone of the portfolio, diversifying investments across 500 representative US companies. |
| Dividend Growth | SCHD | Charles Schwab | 0.06% | Provides stable cash flow by investing in top-tier companies that have increased dividends for 10 consecutive years. |
| Momentum Quant | SPMO | Invesco | 0.13% | A momentum quant ETF tracking the top 100 stocks with the strongest upward price elasticity among the companies comprising the S&P 500 index. |
π οΈ Investment Analysis Tools & Websites I Utilize β
β οΈ "You told me to delete the apps, so do I have to look at all these tools every day?"
It means becoming insensitive to price fluctuations and sensational news, not to neglect studying the economy. One of the core tenets of the Bogleheads philosophy is 'Educate Yourself'. To avoid being swayed by the media's fear mongering or rumors, you need to know how to look directly at 'Raw Data', not news processed by someone else. The tools below are not for tracking prices. They are the 'intellectual arsenal' I have carefully selected and use every day to see through the essence of the market and fact-check.
π A. [Raw Data] Where to see facts instead of news β
To avoid being shaken by the media's fuss, I directly check objective figures and crowd psychology.
- FRED (fred.stlouisfed.org):
- Core Use: A vast official economic statistics database provided by the Federal Reserve Bank of St. Louis. Used to check 'real' indicators, not articles.
- Application: Browsing macroeconomic raw data such as the history of the KRW-USD exchange rate, US base interest rate, money supply (M2), and the yield curve spread.
- CME FedWatch Tool (cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html):
- Core Use: The best tool to avoid being swayed by rumors of the Fed's interest rate hikes/cuts.
- Application: Based on federal funds futures price data, checking the market's 'real betting probability' on how interest rates will change at the next FOMC meeting.
- Fear & Greed Index (edition.cnn.com/markets/fear-and-greed):
- Core Use: Taking a step back to observe the crowd psychology of the stock market.
- Application: Intuitively checking with a score whether the market is falling into Extreme Fear or Extreme Greed.
- Investing.com (kr.investing.com):
- Core Use: Real-time global economic calendar monitoring.
π‘οΈ B. [Backtest] Where to build unshakable conviction β
Verifying how the planet (Core) I chose has weathered past crises to strengthen the mentality for long-term holding.
- Portfolio Visualizer (portfoliovisualizer.com):
- Core Use: The ultimate tool for historical simulation.
- Application: Gaining conviction by backtesting how my asset allocation ratio defended during past economic crises (MDD).
- Macrotrends (macrotrends.net):
- Core Use: Visualizing 10-20 years of long-term financial data for specific assets.
- Application: Surveying the long history of companies and ETFs that have endured major economic cycles, not just short-term 1-2 years.
- ETF.com (etf.com) / ETFdb (etfdb.com):
- Core Use: In-depth dissection of global ETFs.
- Application: Understanding stock overlap between ETFs, comparing fees, and tracking fund inflow/outflow trends.
π¬ C. [In-depth Research] Where to check with my own eyes, not others' words β
Discovering my own Satellite assets and fact-checking, rather than relying on someone's stock recommendations.
- FnGuide Company Guide (comp.fnguide.com):
- Core Use: The standard for Korean stock and domestic company analysis. Checking 10-year financial statements and consensus.
- Seeking Alpha (seekingalpha.com):
- Core Use: Checking in-depth analysis reports on global individual stocks/ETFs and original transcripts of Earnings Calls.
- GuruFocus (gurufocus.com):
- Core Use: Checking corporate financial health such as the Piotroski F-Score and tracking the portfolios of global gurus (like Warren Buffett).
- Finviz (finviz.com):
- Core Use: A heatmap to see the overall market flow at a glance and stock screening through numerous condition filterings.
- TipRanks (tipranks.com):
- Core Use: Final fundamental verification by reverse-engineering the trading trends of management (insiders) and the fund movements of institutions/hedge funds.
- TradingView (tradingview.com) / ETF Check (etfcheck.co.kr):
- Core Use: Technical chart analysis, utilizing custom indicators, and detailed screening of domestically listed ETFs.
π€ D. [Mindset Defense] Solidarity of Philosophy (Reddit Communities) β
A psychological haven to steadfastly maintain principles without wavering during the lonely process of long-term investing.
- r/Bogleheads (reddit.com/r/Bogleheads):
- The mecca for long-term passive index investors who share John Bogle's philosophy. Encouraging each other with "Don't look at the prices, live your daily life."
- r/dividends (reddit.com/r/dividends):
- A forum discussing dividend growth and cash flow investing, such as SCHD.
- r/investing (reddit.com/r/investing):
- Comprehensive discussions on global macroeconomic news, corporate earnings analysis, and the overall asset class, along with monitoring various investment perspectives.
- r/wallstreetbets (reddit.com/r/wallstreetbets):
- An aggressive, individual stock-oriented channel focused on high-risk, high-reward. Used to monitor short-term speculative Meme Stocks trends from a step back as a contrarian indicator.