U.S. One plans to file for three additional funds: a global-fixed-income ETF; a balanced ETF and a series of portfolios that will mimic target date funds.
A recent entrant to the world of exchange-traded funds is looking to launch new funds, including one that’s similar to a target date strategy.
U.S. One launched its first ETF, the One Fund Ticker:(ONEF), on May 11. The actively managed ETF essentially acts as a model portfolio of ETFs and is composed of a portfolio of global equity index-based ETFs managed by The Vanguard Group Inc. and BlackRock Inc.
Once that fund hits $35 million in assets, U.S. One plans to file for three additional funds: a global-fixed-income ETF; a balanced ETF and a series of portfolios that will mimic target date funds.
“The end date won’t be retirement,” said president Paul Hrabal. “We think this portfolio structure would work with a target-date-like approach because it’s easy to use and understand,” he said. He declined to elaborate on what the dates of the portfolios would be based on, or how the portfolios will be designed.
While model portfolios in the ETF world are gaining popularity among advisers, it’s not clear what value U.S. One brings with its ETFs, said Paul Justice, an analyst at Morningstar Inc.
“For the fees they charge to wrap up existing fees, it doesn’t seem to be a good solution for anyone unless they need those exact ETFs,” Mr. Justice said.
OneFund’s total operating expenses are 0.52%, which include the 0.16% fees for the ETFs in the portfolio and a 0.35% management fee. But as the fund gains assets, and if the ETFs within the portfolio lower their expenses, shareholders will see reductions, Mr. Hrabal said.
“There are lots of advisers who want this because it’s a way to allow small investors to own a diversified portfolio,” he said. “For a $20,000 IRA, an adviser doesn’t want to spend time doing all the allocation work.”
Mr. Hrabal, who spent most of his career as director of finance for development at Dell Inc., said he has all of his investible equity assets in the OneFund.