New Global Fund-of-Funds ETF Launched: A Sign of Things to Come

Includes: ONEF, SCZ, VB, VEA, VV, VWO
by: Michael Johnston

In perhaps a sign of things to come, a newcomer to the ETF industry has popped up, offering a fund-of-funds ETFs designed to offer exposure to global equity markets. The One Fund (NYSEARCA:ONEF) currently consists of five ETFs, including four Vanguard products and one iShares ETF:

  • Vanguard MSCI US Prime Market 750 Index (NYSEARCA:VV): 49.67%
  • Vanguard MSCI US Small Cap 1750 Index (NYSEARCA:VB): 20.22%
  • Vanguard MSCI EAFE Index (NYSEARCA:VEA): 20.03%
  • Vanguard MSCI Emerging Markets Index (NYSEARCA:VWO): 5.07%
  • iShares MSCI EAFE Small Cap Index Fund (NYSEARCA:SCZ): 5.01%

So about 70% of ONEF’s holdings are in the US, with another 16% in Europe and 12% in Asia. The allocation to emerging markets is relatively small, coming in at just about 5%.

ONEF is being offered by U.S. One, a Reno-based firm making its initial foray into the ETF space. The One Fund offers investors a way to achieve the entirety of their equity exposure through a single security; the ETF’s fact sheet notes that investors can achieve access to more than 5,000 companies in the US and around the world through ONEF. It’s also worth noting that the One Fund currently consists of relatively cheap ETFs; expense ratios range from 0.13% for VB to a still-modest 0.40% for SCZ, and the all-in expense ratio, including the pro-rata fees charged by the underlying holdings, is 0.51%. As such, ONEF appears to be primarily geared towards buy-and-hold investors.

Although ETFs initially appealed to cost-conscious investors not known for high turnover in their portfolios, these vehicles have since been embraced by more active investors.

Disclosure: No positions