No one at this point doubts the success of the ETF industry. The growth in the number of funds and amount of assets under management has shown it to be a vital part of the investment landscape of the new millennium.

We have had our quibbles with the ETF sponsors in large part due to what we see as a “throw it on the wall and see if it sticks” attitude toward the launch of new funds. Occasionally a new fund comes along that is a genuine innovation. Oftentimes fund launches are me-too funds that are simply there to fill up “shelf space.”

However once you take a step back and examine the ETF landscape you see that the easy access to a globally diversified, low cost, indexed portfolio has opened up to a wide range of investors, institutional and individual alike.

A recent post by Matthew Hougan at IndexUniverse.com demonstrates just how far this trend has progressed. In it he shows how one can create an all-ETF portfolio that is globally diversified portfolio representing a number of asset classes all with an expense ratio of 0.15%.

While one can quibble with the exact allocations, the overall picture is pretty amazing. A few years ago some of these asset classes, like commodities, were really not available to individual investors. Now they represent a mainstream investment vehicle.

The trend toward opening up asset classes via ETF is by no means over, but by definition it must be running out of steam. Again at IndexUniverse.com, Matthew Hougan reports on the imminent launch of a series of international small cap equity ETFs. While these are not the first of this type of fund they will be additional diversification opportunities.

In the end, what does all of this mean? Let’s go back to our title post. The returns from a globally diversified all-ETF portfolio with an expense ratio of 0.15% represents a high hurdle for investors of all stripes to overcome. Said another way, this minuscule expense ratio is going to be difficult to match for the average investor.

Whether one relies on actively managed mutual funds, managed accounts or your own stock-picking prowess all of these strategies require additional expenses in time and capital. Therefore today’s self-directed investor needs to be all the more clear that their approach can reward them over and above that available in a low-cost, indexed ETF world.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.