Fund of fund solutions have been a hit with mutual funds and now they’re poised to become a hit with exchange-traded funds (ETFs).
Invesco PowerShares has introduced three ETFs that primarily own other ETFs. The funds have been dubbed “autonomic” by the company because they employ an automatic asset-allocation investment strategy.
The funds are the PowerShares Autonomic Balanced NFA Global Asset Portfolio (PCA), the PowerShares Autonomic Balanced Growth NFA Global Asset Portfolio (PAO), and the PowerShares Autonomic Growth NFA Global Asset Portfolio (PTO).
The funds employ a patented strategy called “Resampled Efficiency” optimization, developed by New Frontier Advisors.
The new series of ETFs mainly hold PowerShares ETFs, but also own ETFs managed by other companies like Barclays Global Investors (iShares), State Street Global Advisors and the Vanguard Group.
PCA contains 27 ETF holdings and all but 10 of the funds are PowerShares ETFs.
The Autonomic ETFs will charge annual expense ratios of 0.25 percent, which doesn’t include the additional cost of the underlying funds. PowerShares estimates the additional cost to be an additional half percent, but that will vary over time.
Ron DeLegge is the San Diego-based editor of www.etfguide.com.