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The Four Passive Funds in My Portfolio

What I own and why.

I’ve long argued that most investors should own actively and passively managed funds. Both have merits, and you can apply many of the same criteria in choosing them. Either way, you want low costs, a good strategy, and good stewardship.

So, it probably won’t surprise you that I own four passively managed funds. They help to lower the costs of my portfolio overall, provide diversification, and serve as low-maintenance vehicles that I don’t have to worry over. My passive funds were the best available at the time, though there are some very good substitutes available now. I bought the Vanguard fund in 2006, two from Fidelity in 2009, and the DFA fund in 2014 when it was added to Morningstar's 401(k).

All of that logic applies overseas, even though some people are wary of indexing overseas.

My next-largest passive investment is

If you want to avoid emerging markets, then the exchange-traded fund

Finally, we come to

The fund charges 0.53%, which is cheap for a foreign small-cap fund but not so cheap for an index fund. You may prefer to go with

Premium Members can see all of our Morningstar Medalist index funds on the Morningstar Medalists page. (Select Index in the gray section on the left.)

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About the Author

Russel Kinnel

Director
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Russel Kinnel is director of ratings, manager research, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He heads the North American Medalist Rating Committee, which vets the Morningstar Medalist Rating™ for funds. He is the editor of Morningstar FundInvestor, a monthly newsletter, and has published a number of prominent studies of the fund industry covering subjects such as manager investment, expenses, and investor returns.

Since joining Morningstar in 1994, Kinnel has analyzed virtually every type of fund and has covered the most prominent fund families, including Fidelity, T. Rowe Price, and Vanguard. He has led studies on the predictive power of fund data and helped develop the Morningstar Rating for funds and the Morningstar Style Box methodology. He was co-author of the company's first book, Morningstar Guide to Mutual Funds: 5-Star Strategies for Success (Wiley, 2003), and was author of the book Fund Spy: Morningstar's Inside Secrets to Selecting Mutual Funds That Outperform, published in 2009.

Kinnel holds a bachelor's degree in economics and journalism from the University of Wisconsin.

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