Which is ultimately more important to the Boglehead investing philosophy - simplicity or low cost?
A typical Boglehead portfolio might include SCHB 75% VXUS 25% and provide exposure to the entire world market with two low-cost ETFs offering cheap and simple, but what if I could min-max low expenses? Would sacrificing some simplicity for the lowest possible fees be worth it, or would it be Boglehead blasphemy?
TL;DR scroll to the bold conclusion and 1), 2) and 2a at the very bottom.
For example: take the same portfolio above with SCHB at 75% and VXUS at 25%
SCHB is ~73% large cap, ~19% mid cap, and ~8% small cap with an expense ratio of .03%, but could I use SPYM (.02%) VO (.03%) and VB (.03%) to get a lower weighted avg expense ratio?
If I go for exact measurement to get a weighted avg., I could do 73% SPYM, 19% VO, and 8% VB for my 75% category of Total U.S. Market.
.02 x 73 + .03 x 19 + .03 x 8 = 2.27/100 = .0227% weighted expense ratio. Lower than .03%.
I could do the same with VXUS (.05%), which is 75% developed markets and 25% emerging markets, or VEA 75% (.03%) and VWO 25% (.06%) for my 25% Total International Market 25% category. I would need three parts VEA and one part VWO.
.03 x 3 + .06 = .15/4 parts total = .0375%, which is less than VXUS's .05%.
Now let's take these and apply it to the weighted avg. of the portfolio with .0227% replacing SCHB's .03% and .0375% replacing VXUS at .05% I will need 3 parts SCHB alternative and 1 part VXUS alternative.
.0227 x 3 + .0375 x 1 = .1056/4 parts total = .0264% expense ratio
Cheaper than SCHB at .03%
Cheaper than VXUS at .05%
Cheaper than VT at .06%
Does the math math? In other words, are the calculations logical or did I totally screw up somewhere?
Assuming I'm not trying to change my portfolio to try to time the market, or taking unnecessary risks that might lead to panic selling or other counterintuitive behaviors:
a) Is the increased complexity of using 5 ETFs instead of 1 or 2, even if it could save thousands over the lifetime of my portfolio (most likely not many multiple 10's of thousands btw) acceptable for a Boglehead because it reduces expenses by an estimated half, or is it unacceptable because simplicity is the true cornerstone of Bogelhead investing philosophy, not making it as cheap as possible - cheap enough will do?