US One Seeks To Offer Foreign-Holding ETFs

August 19, 2010

Reno, Nev.-based upstart One Fund casts a wider net to include foreign securities in its ETFs.


U.S. One Trust, the Reno, Nev.-based investment adviser, filed with the Securities and Exchange Commission to offer a line of actively managed exchange-traded funds of funds that invest in both U.S.- and foreign-listed securities. Currently,
U.S. One only has permission to invest in U.S.-listed ETFs.

U.S. One Trust entered the ETF market in May when it launched its One Fund ETF (NYSEArca: ONEF), an actively managed fund of funds that seeks to reflect 95 percent of the world’s stock market value. The fund’s assets grew 25 percent in July to $5 million, according to data compiled by IndexUniverse.com.

ONEF’s top holdings are the Vanguard Large Cap ETF (NYSEArca: VV), the Vanguard Europe Pacific ETF (NYSEArca: VEA), and the Vanguard Small Cap ETF (NYSEArca: VB), which together account for nearly 90 percent of its assets.

U.S One is positioning itself as a provider of products for the smaller individual investor who may not have sufficient investable assets to garner the attention of most financial advisers.

For example, ONEF has attracted around 200 individual shareholders since its launch, making the average investment in the fund $25,000.

According to the exemptive relief filing,
U.S. One’s new funds will take a similar approach by holding low-cost funds in an actively managed portfolio that incorporates foreign-listed ETFs. The company didn’t disclose expense ratios or ticker symbols in its filing. The fee on its existing ETF, ONEF, is 0.51 percent.

Buy-And-Hold Philosophy

Although
U.S.
One’s funds are actively managed, the firm’s investment philosophy is to buy low-cost funds that represent a broad swath of the market and hold them over the long term in an attempt to avoid the pitfalls of market timing and stock picking.


U.S.
One’s President Paul Hrabal said in a telephone interview that his firm’s plan for growth includes both small investors as well as advisers: “We have interest from advisers who want to launch their own ETFs, and we’re looking at launching some funds with them as sub-advisers under our structure.”


U.S.
One Advisors will manage the day-to-day operation of the fund.

Exemptive relief filings grant ETF firms exception to sections of the Investment Act of 1940 and are just the first step in the path to launching ETFs. It often takes at least six to 12 months from the date of the initial filing for a company’s first ETF to hit the market.

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