Why invest in a fund of funds (FOF) ETF? With so many offerings available for investors right now across the burgeoning ETF vehicle, staying up to date on all the latest ways to invest in an ETF is an important task for the knowledgeable investor. With advantages for smaller investors looking for better exposure and strong diversification, a FOF ETF like the iMGP RBA Responsible Global Allocation ETF (IRBA) is worth a look, holding a variety of sustainably minded ETFs that offer a very specific set of exposures.
A fund-of-funds (FOF) ETF contains different underlying portfolios of other funds, and while often investing in mutual funds, IRBA instead embraces the transparency of the ETF vehicle to offer a clear set of holdings not only for the parent ETF IRBA, but also for the securities within the ETFs that IRBA itself holds.
According to the discretion of the ETF’s other parent iMGP, IRBA holds strategies like the Vanguard ESG International Stock ETF (VSGX), the Nuveen ESG Large-Cap Value ETF (NULV), and the iShares ESG Aware US Aggregate Bond ETF (EAGG). Crucially, IRBA is built using Richard Bernstein Advisors (RBA) profit cycle approach that “X-Rays” the ETFs that looks at the underlying components to select ETFs the fully encapsulate the investment goals and do not simply pick an ETF that falls into an ESG, large cap slot.
So, rather than having to individually interact with a whole set of ETFs, an investor can get a single ETF holding a suite of others with a bespoke, diversified set of exposures that meet the goals of the parent ETF’s strategy. In this case, IRBA uses a multi-asset go anywhere strategy to asset allocation with an ESG screen, expecting a 65% allocation to equities and a 35% allocation to fixed income over a ten year period, though that can vary.
IRBA invests according to RBA’s profit cycle research, a top-down, fundamentals-driven strategy that looks to accelerating or decelerating profits and invests in the appropriate sectors for whichever environment the ETF finds itself in. IRBA charges 69 basis points for its active approach, with NULV and EAGG the two highest-weighted ETFs in IRBA at 17.1% and 15.5% respectively. For those looking for active ETF-based exposure to a diverse set of sustainable securities, IRBA is one to consider.
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