One ETF fits all (ONEF) ????

By: ispeculatornew
Date posted: 06.25.2010 (4:11 am) | Write a Comment  (4 Comments)

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I recently read about a new ETF called One which aims to be a one stop solution for investors. How so? The aim is for investors from 30 to 50 years old to own one ETF that will give them an exposure to equities around the world. No need for single names, rebalancing, adjusting as years go by and as the economy changes.

Too good to be true?

As you probably know, I am a big fan of ETF’s and certainly think that a portfolio can be built easily. As always, I think it’s important to specify that I am talking about a retirement portfolio here. I’m personally a believer in a fairly conservative retirement account for all investors. Then, when I have enough saved up during a year, I can start funding a more aggressive and speculative portfolio with active or passive investing. All the long & short picks described on IntelligentSpeculator would obviously be done in the speculative portfolio.  I wrote a more detailed post about this here.

So back to ONEF

The ETF claims to give exposure to the entire Global Equity market but provides that at a high price. It charges 0.51% of annual expenses which does not sound that bad. But these fees are added to the ones charged by what is inside the ETF. In fact, I would say that it is very similar to the target date ETF’s although those are maybe even a little better. I had written a review about target date ETF’s and how I was against them. Basically, they save you a little work but charge you a lot more to do so.

Instead of buying a target date fund or ONEF, I think investors should simply use the 5-6 ETF’s such as SPY, VWO, etc. These will provide the same exposures but at much lower fees and you gain additional control over your investment

Even less flexibility than target date funds….

With target date ETF’s, the asset allocation varies with time. As the retirement date comes up, assets inside of the ETF become geared towards safer, less volatile plays. That is generally a good idea and what you would end up doing if you invest on your own anyway (in almost all cases) but with ONEF, that cannot be done as easily as the target is simply the “average investor”, no matter if he is 30 or 50 years old.

Because of that, the fund is too secure for most investors in my opinion. Take a look at what is inside here.

I don’t think that a young investor should onlyt have 5.11% of his portfolio invested in emerging markets. And owning about 70% of your equities in US holdings also seems high considering everything that is going on in the world and all of the growth that is happening in Asia and elsewhere.

Too good to be true…

You know what they say. If it sounds too good to be true, it usually is. And investing in only one stock certainly sounds too good to be true. I do think that at some point target date ETF’s could become a viable option if costs came way down but for now, I would stick to the 5-10 ETF portfolio.

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4 Comments

  1. Comment by Craig — June 25, 2010 @ 10:18 am

    So if I understand correctly, it’s like buying index mutual funds but they are traded on the market as for mutual funds, they are traded once a day (at the closure price)…

    Is it just me or this sounds useless?

  2. Comment by IS — June 26, 2010 @ 9:37 pm

    @Craig – Not sure what you mean. Are you talking about ONEF or ETF’s in general?

  3. Comment by Craig — June 27, 2010 @ 7:11 am

    I was wondering the point of buying ONEF instead of an index mutual fund (which would probably be cheaper, right? )

  4. Comment by IS — June 27, 2010 @ 5:45 pm

    @Craig – Can you give me an example of such a fund? Will get back to you;)

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