Roth IRA Fund Options from Edward Jones

Edward D. Jones & Co., L.P., commonly known as Edward Jones in the industry, is a financial services company. It has $1.7 trillion in client assets under management (AUM), which the company calls “assets under care,” as of the end of 2022. Among its businesses, Edward Jones is a full-service brokerage firm and a registered investment advisor (RIA).

Founded in 1922 in St. Louis, the company has expanded dramatically during the past century. One of the largest broker-dealers in the United States, it now has nearly 19,000 financial advisors, more than seven million clients, and branches throughout the United States and Canada.

Edward Jones offers customers a broad selection of asset classes in which to invest, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs). But the company does not publish information on its website on how many or which mutual funds and ETFs are available to customers who open Roth individual retirement accounts (Roth IRAs). Edward Jones also declined to respond to Investopedia’s formal request for information on the number and variety of fund offerings that the company provides to customers. The company also declined to confirm specific ETFs or mutual funds that it offers.

However, it is safe to assume that Edward Jones offers a selection of broad-based stock and bond funds similar to every other major broker that offers investments in individual funds and ETFs. For example, Edward Jones is likely to offer low-cost S&P 500 Index funds and broad total stock market funds, as well as bond funds tracking the Bloomberg Aggregate Bond Index.

Also, keep in mind that Roth IRAs are just one of the multiple tax-advantaged retirement accounts available to U.S.-based investors. In addition to Roth IRAs, there are traditional IRAs, 401(k)s, and Roth 401(k)s. The biggest distinction to keep in mind when deciding between a traditional and Roth IRA is that your pretax income is placed into a traditional IRA but taxed when it is withdrawn. By contrast, you can only use after-tax earnings to deposit into a Roth IRA, but withdrawals are tax free.

Key Takeaways

  • Edward Jones is a full-service brokerage with $1.7 trillion in assets under management (AUM).
  • The company does not disclose how many exchange-traded funds (ETFs) or mutual funds, or what specific funds, it offers to investors opening Roth individual retirement accounts (Roth IRAs).
  • When making a retirement account, most investors would be well served to start with a broad-based, low-cost stock index fund and a similar bond index fund.
  • These two funds can serve as a foundation for advanced investors to build a more complex portfolio, or as the primary portfolio for newer investors looking for simplicity.
  • Roth IRAs allow you to avoid paying taxes on investment returns by investing after-tax income now.
  • VTI and SPAB are good options for your starting stock and bond funds, and are likely to be representative of the kinds of funds offered by Edward Jones.

Vanguard Total Stock Market ETF (VTI)

  • Expense Ratio: 0.03%
  • Assets Under Management: $322.9 billion
  • One-Year Trailing Total Return: 14.85%
  • 12-Month Trailing (TTM) Yield: 1.62%
  • Inception Date: May 24, 2001

VTI is a stock index fund that tracks the CRSP US Total Market Index. With 3,793 holdings, VTI has exposure to a wider number of stocks than its main broad-market ETF competitors. This breadth is especially helpful if you want your portfolio to be as simple as possible and only want one stock fund. If you want a more complex portfolio with more specific control of your exposure to different parts of the market, you may want to start with a S&P 500 index fund that focuses exclusively on large-cap stocks. Investors can then complement the S&P 500 Index fund by purchasing a large-cap or midcap ETF to fine-tune levels of exposure to the areas of the market that they want.

VTI’s holdings tilt heavily toward large-cap equities. It has 68.3% of its holdings in large-cap stocks, 13.7% in midcap stocks, and 8.1% in small-cap stocks. The weighted median market cap for stocks in the fund is $128.9 billion, meaning that stocks with half of the fund’s assets have a market cap above that number, and half below.

VTI is managed by principal portfolio manager Gerard C. O’Reilly and portfolio manager Walter Nejman. The two have managed the fund for 22 years and seven years, respectively, and have a combined 46 years of management experience.

SPDR Portfolio Aggregate Bond ETF (SPAB)

  • Expense Ratio: 0.03%
  • Assets Under Management: 7.3 billion
  • One-Year Trailing Total Return: 1.07%
  • 12-Month Trailing (TTM) Yield: 3.38%
  • Inception Date: May 23, 2007

SPAB is a bond index fund that tracks the Bloomberg U.S. Aggregate Bond Index. This index covers the entirety of the investment-grade bond market, allowing investors to get broad exposure to virtually the whole U.S. bond market, except for municipal (muni) bonds and high-yield bonds.

The fund’s holdings include 41.31% Treasury bonds, 26.18% mortgage-backed securities (MBS), 14.58% corporate bonds, and 1.04% agency bonds. With its broad exposure to the U.S. fixed-income market at a very low price, if you just want one bond ETF, SPAB is a good option to look at. If you want a more complex portfolio and are interested in more advanced fixed-income investing, consider looking into adding a muni bond ETF or a high-yield bond ETF to add exposure to those areas left out by SPAB.

When looking at what percentage of assets to put into the two funds presented above, the broad rule is generally the 60/40 rule—60% of assets in stocks, 40% in bonds—or invest a percent of your assets in stocks equal to 100 minus your age. There is considerable debate as to whether these old rules still hold up. Today, many investment firms are moving toward a higher allocation for stocks.

Exact numbers aside, it is certain that, as a broad asset class, stocks are comparatively riskier than bonds and have higher returns. In addition, as you generally get closer to retirement, you likely want to have a less risky portfolio. That’s because the point at which you may need to start drawing on your retirement savings is getting closer. The exact percentages will depend largely on how close you are to retiring, how close you are to your retirement savings goal, and what your risk tolerance is.

Does Edward Jones offer Roth individual retirement accounts (Roth IRAs)?

Yes, Edward Jones offers Roth individual retirement accounts (Roth IRAs).

What are the fees for a Roth IRA at Edward Jones?

Edward Jones has account charges of $75 a year for Roth IRAs.

What is the Roth IRA five-year rule?

The Roth IRA five-year rule states that you can’t withdraw the earnings from your Roth IRA tax free until five years after you began contributing to your Roth IRA. This rule applies no matter what age you are. You can, however, withdraw the direct contributions that you’ve made at any time.

Second, while the 10% early withdrawal penalty that applies to traditional IRAs doesn’t apply to Roth IRAs, if you convert a traditional IRA to a Roth IRA, you have to wait five years until after the conversion to withdraw the money converted from the traditional IRA without penalty.

The Bottom Line

When creating a Roth IRA, it’s very hard to go wrong by starting with a low-fee, broad-based stock fund and a similarly broad and inexpensive bond index fund. They can serve as your whole portfolio if you want simplicity. They also are an excellent jumping-off point if you want to become an advanced investor seeking to complement these funds with other investments.

As mentioned above, Edward Jones provides no specific information on how many funds it offers or what specific ones. But VTI and SPAB are widely offered funds in the industry and good examples of funds that are likely offered by Edward Jones.

Article Sources
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  1. U.S. Securities and Exchange Commission. "Form 10-K for the Fiscal Year Ended December 31, 2022," Page 19.

  2. Edward Jones. “Managing Partner Profile: Penny Pennington,” Pages 2-4.

  3. Edward Jones. “Investment Products.”

  4. Internal Revenue Service. “Traditional and Roth IRAs.”

  5. Morningstar. “Vanguard Total Stock Market ETF: VTI: Quote.”

  6. Morningstar. “Vanguard Total Stock Market ETF: VTI: Performance.”

  7. Vanguard. “VTI: Total Stock Market ETF.”

  8. Morningstar. “SPDR? Portfolio Aggregate Bond ETF: SPAB: Quote.”

  9. Morningstar. “SPDR? Portfolio Aggregate Bond ETF: SPAB: Performance.”

  10. Morningstar. “SPDR? Portfolio Aggregate Bond ETF: SPAB: Quote.”

  11. State Street Global Advisors. “SPDR? Portfolio Aggregate Bond ETF: SPAB.”

  12. Edward Jones. “Roth IRAs.”

  13. Edward Jones. “Schedule of Fees for Individual Retirement Accounts,” Page 1.

  14. Financial Industry Regulatory Industry. "Individual Retirement Accounts."

  15. Internal Revenue Service. “Topic No. 557 Additional Tax on Early Distributions from Traditional and Roth IRAs.”

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