New Fee-Free ETF Launches

The world of ETFs has some new competition from a product that advertises itself as having no management fees. The Cambria Global Asset Allocation ETF GAA is made of 29 other ETFs. It aims to create a true global portfolio by investing in a basket of U.S and foreign bonds, equities, commodities, real estate and currencies, bringing its total exposure to over 20,000 individual securities.

The global ETF is comprised of ETFs from some of the leading fund managers in the world, including Vanguard, BlackRock, State Street, WisdomTree and Schwab.

The top individual holdings include:

• Vanguard Total Bond Market ETF BND with an 8 percent holding
• Vanguard Emerging Markets Stock Index Fd VWO making up 7 percent
• United States Commodity Index Fund ETV USCI at 7 percent

There is currently about 43 percent in equities and 50 percent in fixed income. The passively managed ETF will reallocate its portfolio holding once per year.

Related Link: This Company Offers A Product Like Customizable, No-Fee ETFs

GAA is advertised as having zero management fees. This is true; however, there is total annual acquired funds fee of 0.29 percent. Therefore it is not completely free to own the ETF. Yet, it is favorable compared to the 0.60 percent the average ETF charges on an annual basis.

The company views the ETF not only with other ETFs and mutual funds, but also advisors that will charge over 1 percent for a buy-and-hold, long-term investment strategy. While GAA is globally diverse, the annual rebalance may not be enough, and the overweight to fixed income could hurt the performance in the future if interest rates begin to increase.