Almost a year ago to the day, I wrote about the best fund-of-funds ETFs to buy for 2023. It’s time to follow up the effort with three more for 2024.
The three from last year were the iShares Core Aggressive Allocation ETF (NYSEARCA:AOA), the Cambria Global Asset Allocation ETF (BATS:GAA) and the FormulaFolios Smart Growth ETF.
One-year returns for AOA and GAA were 13.7% and 6.7%, respectively. FormulaFolios merged with Brookstone Capital Management in July 2020. FormulaFolis became Brookstone Asset Management on June 1, 2023. FFSG was liquidated on Oct. 6, 2023.
Looking to the future, I’ll try to find three fund-of-funds ETFs that don’t close in less than a year and hopefully automate your investing strategy. Further, I’ll keep an eye on fees, ensuring you get bang for your buck. At least two of the three will have a total management expense ratio of 0.50% or less.
Here are my three picks for the best fund-of-funds ETFs to buy for 2024 and beyond.
SPDR SSgA Global Allocation ETF (GAL)
I’m convinced that at some point in the past I’ve recommended the SPDR SSgA Global Allocation ETF (NYSEARCA:GAL). Sure enough, I have. In March 2022, I wrote about 10 asset allocation ETFs to buy. GAL was one of them.
At the time, it had 19 ETFs in the fund-of-funds with nearly 62% in equities and the rest in fixed-income investments and cash.
Today, it has 18 ETFs, with the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), SPDR Portfolio Developed World ex-US ETF (NYSEARCA:SPDW) and the SPDR Portfolio Emerging Markets ETF (NYSEARCA:SPEM), accounting for 51% of the fund’s $241.1 million in net assets.
The average stock in the ETF has an average market capitalization of $54.0 billion, a 16.24 P/E ratio, a P/S of 1.51 and a 2.43% dividend yield.
It charges a reasonable 0.35%, or $35 per $10,000 invested.
Global X Thematic Growth ETF (GXTG)
Who better to have a thematic fund-of-funds than Global X, an industry innovator?
The Global X Thematic Growth ETF (NASDAQ:GXTG) provides growth investors with a reasonably priced (0.50% MER) investment that covers many of the disruptive macro trends resulting from technological change.
The ETF tracks the performance of the Solactive Thematic Growth Index. The passive index has eight Global X thematic ETFs, with the Global X Disruptive Materials ETF (NASDAQ:DMAT) accounting for 14.99% of the $18.0 million in net assets.
Launched by Global X in October 2019, the other seven ETFs in the holdings include thematic funds for renewable energy, video games, data centers, lithium, fintech, solar and genomic.
The three top sectors by weight are technology (21.7%), materials (19.3%) and utilities (13.5%). The three countries by weight are the U.S. (41.8%), China (18.5%) and Japan (5.3%).
The average stock in the ETF has an average market cap of $18.67 billion, a 24.5 P/E ratio, a P/B of 2.25 and a 1.03% dividend yield.
Word to the wise: This is a contrarian play. Its performance since inception is not good. However, many of the areas and ETFs it owns have the potential to break out in a big way.
First Trust Dorsey Wright Focus 5 ETF (FV)
The First Trust Dorsey Wright Focus 5 ETF (NASDAQ:FV) is the final fund-of-funds ETF I’m recommending today.
Morningstar.com gives it a five-star rating for risk-adjusted returns over the past 5 and 10 years. It charges 0.90%, which includes an annual management fee of 0.30% and 0.60% in acquired fund fees from the five First Trust ETFs held. The fund-of-funds tracks the performance of the Dorsey Wright Focus Five Index.
Dorsey, Wright & Associates (DWA) is the index provider. It starts with all First Trust’s sector and industry ETFs. It then ranks each of the funds by price momentum. The top five ETFs by relative strength are in the index.
DWA does twice-monthly relative strength analysis. ETFs are removed when they fall out of favor and lose momentum versus the other First Trust sector and industry ETFs. When one is removed, the index is rebalanced so each of the five accounts for 20% and is equally weighted.
Launched in March 2014, it has $3.75 billion in net assets, indicative of how popular this fund-of-funds ETF is with investors.
It is what you would call a tactical asset allocation ETF. It’s worth the extra fees.
On the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
