Exchange-traded fund based in Silver State to hit market
Nevada becomes home Tuesday to a new, innovative investment vehicle product designed for mom and pop investors.
Shares in U.S. One Inc.'s exchange-traded fund will be bought and sold on the New York Stock Exchange, giving investors a way to hold stakes in 5,000 companies around the world in one fund.
Exchange-traded funds are baskets of stocks, bonds and other securities. ETFs function similarly to mutual funds but can be traded like stocks. Investors can buy and sell shares in mutual funds once a day, but ETFs can be bought and sold anytime the market is open.
The One Fund ETF (symbol: ONEF) will hold interests in five other stock ETFs, making it a "fund of funds."
Paul Hrabal, president of U.S. One Inc. and the fund's portfolio manager, believes One Fund is the first ETF to be based in Nevada. It's headquartered in Reno.
In addition, Hrabal knows of no other ETF that provides investors with a way to hold a representative sample of stocks from around the world although Advisor Shares of Maryland offers actively managed ETF funds of funds.
As such, Hrabal figures his product is ideally suited for small investors who have $200,000 or less to invest, generally too small a sum to interest professional investment advisers.
"I believe that the average shareholder is going to own $5,000 to $10,000 of our fund," he said.
By buying shares in One Fund, an individual investor will have exposure to a diversified portfolio that represents 95 percent of the global stock markets, the company said.
One Fund doesn't try to pick the best stocks. Nor does it shift holdings in attempts to focus on the hottest stock markets. Hrabal's company subscribes to the investment theory that passively managed index funds provide the highest returns over long periods.
The ETF will rebalance its holdings once yearly so that the asset allocation among various stock markets remains relatively consistent. It's passive, buy-and-hold strategy is designed to minimize taxes.
About 70 percent of the ETF investments are in domestic companies, and 30 percent are in foreign companies, including
5 percent from companies in emerging markets such as China, Brazil and South Africa.
One Fund will hold five ETFs. They include three ETFs from Vanguard Group, a mutual fund organization known for low-management fees. Like many Vanguard products, the three ETFs are index funds, which produce results similar to the entire markets for domestic large-cap, domestic small-cap and foreign stocks.
One Fund also charges low operating expenses and management fees compared with the typical mutual fund. The fund charges 0.51 percent, compared with 1.34 percent at the typical, actively managed stock fund.
Investors may find even lower management fees for some of Vanguard's index funds, however.
To buy and sell ETFs, an investor must pay a commission to a stockbroker. One Fund shares will start trading Tuesday at $25 a share.
Contact reporter John G. Edwards at
jedwards@reviewjournal.com
or 702-383-0420.
