U.S. One Inc. Launches ONEF – an Actively-Managed ETF of ETFs
Tuesday, May 11th, 2010U.S. One Inc, whose N1-A filing with the SEC to launch an Actively-Mananged ETF of ETFs we had previously discussed, today launched its first ETF product called One Fund (ONEF) which will be listed on the NYSE. The company had announced the finalization of ONEF through a press release on May 4th, and it also filed a “Notice of Effectiveness†with the SEC on the same date.
The launch of One Fund highlights the inherent flexibility of an actively-managed ETF structure. Today, Active ETFs house everything from municipal bond portfolios to long-short relative value strategies, plain vanilla equity growth funds to seasonal rotational strategies, money-market instruments and even absolute return funds. And with the launch of ONEF, there are now two actively-managed ETF of ETFs on the market. And waiting in the wings to launch are even more varied strategies such as international equity funds, ADR-focused funds and global macro strategies. The kind of diversity the Active ETF structure allows, combined with the benefits of ETFs in general – tax efficiency, liquidity, transparency, low cost – makes for a compelling argument for issuers and fund managers to consider.
This latest addition to the Active ETF line up, One Fund (ONEF), will have an investment objective of achieving long-term growth but its investment strategy will rely entirely on low cost Index ETFs that it will invest in. The fund aims to provide pure asset class exposure to an internationally diversified equity portfolio representing in excess of 5,000 companies worldwide in different sectors. Paul Hrabal, the Chief Investment Officer of the fund elaborated, “We have taken a top level view of how a global stock portfolio should be allocated by region and company size, then selected index-based ETFs that represent each of those segments at the lowest cost. The Fund will then hold that allocation long term. There is no intent to make short term, tactical changes to the allocation based on any view of how one country/region/industry/size company will perform vs. another.†ONEF is hoping to take advantage of low cost index ETFs that track individual markets and provide the desired exposure cheaply. As a result, the fund’s expense ratio is a relatively low 0.51%, in comparison to other funds providing exposure to multiple ETFs or structured as a fund-of-funds. The strategy emerges from Paul Hrabal’s belief that high cost actively-managed mutual funds are not providing much value to investors and that “long-term, buy and hold, passive index-based investing†is the way to go.
Paul Hrabal is the President of U.S. One Inc. and also the Chief Investment Officer for the ETF. He has 20 years of experience in the financial management and business development and will be the person responsible for making day-to-day investment decisions for ONEF.
Paul also mentioned that ONEF will undergo rebalancing only once a year and will have tolerance bands set for each segment of the fund’s allocation, which if breached, would trigger rebalancing. “We believe annual rebalancing with a 5% band is the best approach to 1) ensure adherence to our allocation targets while 2) keeping transaction costs and, hence, the overall fund costs, to a minimumâ€Â, Paul said. The fund is expected to have a turnover of less than 10%.
All the details on ONEF, the fund fact sheet and its prospectus can be found here.
Disclosure: No positions in above-mentioned names.
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