FIRE Retirement ETFs Target DIY Investor Movement

Is an investing movement based on aggressive saving as a means of retiring early ready for its own ETF?

Michael Venuto, Chief Investment Officer at Tidal Financial Group, believes the time is now to cater to a category of do-it-yourself investors subscribing to the FIRE movement, which stands for Financial Independence, Retire Early.

Tidal, a white label ETF platform, jumped into the ETF business this week with the FIRE Funds Wealth Builder ETF (FIRS) and the FIRE Funds Income Target ETF (FIRI), which Venuto expects to resonate with a segment of investors he says are being largely ignored by financial advisors.

“We saw certain ETFs grow in popularity with the FIRE community, and these new ETFs came together as products designed to meet the goals of that community,” he said. “We’re targeting the FIRE community because it seems to be the place where DIYers are talking about intelligent things and the financial community is not talking to them.”

The FIRE ETFs, which began trading this week, are funds of ETFs that only charge fees at the underlying ETF level, which checks a critical box for the fee-conscious FIRE investors.

However, time will only tell if a category of investors comfortable loading up on dirt-cheap ETFs like the Vanguard Total Stock Market ETF (VTI) and popularizing the phrase “VTI and chill” are ready to get even a little bit more complicated.

FIRE Retirement ETFs: Beyond ‘VTI and Chill’

The FIRE movement, which is popular among millennials, traces its history to the early 2010s and has gained traction through online communities, where investors are known to live frugally and save up to 70% of their income as a means of ultimately retiring a decade or two before they are even eligible for Social Security benefits at age 62.

As Venuto cited, the financial planning community has largely overlooked this group for a few reasons. First, younger people without a lot of money are not typically the type of client advisors aggressively try to solicit. Secondly, FIRE devotees are generally too fee conscious to pay for financial advice.

Venuto thinks he has struck the right cord with the FIRE ETFs, which will each hold between 10 and 25 underlying ETFs.

FIRS is promoted as offering diversification across “four distinct economic engines,” including “prosperity, recession, inflation, and deflation.” In other words, navigating beyond just "VTI and chill."

FIRI, meanwhile, is designed with the goal of seeking current income, “aiming to provide a stable annual yield of approximately 4%.”

“We’re going to lose money on this,” Venuto said in reference to not charging a fee at the fund of an ETF's level.

“But we’re doing it because it’s good for our clients, and it’s another reason for ETF issuers to come to us,” he added. “We think FIRE is the future.”