VanEck has just released the “everything bagel” of exchange-traded funds.
The VanEck Wealth Builder ETF (WBMO), launched Oct. 27, is an allocation fund that goes beyond the traditional stock-and-bond mix, adding exposure to both commodities (gold) and even Bitcoin in a single fund.
It’s about as much as you could possibly hope to stuff into one investment product, and it fills a need for investors who want to build an all-encompassing portfolio with as little friction as possible.
Let’s take a quick look.
WBMO: ‘The Portfolio in a Can,’ Improved
We have long had access to “allocation” (aka “balanced”) funds, which hold the two primary building blocks of an investment portfolio (stocks and bonds) in varying ratios. Because stocks and bonds often account for virtually all (if not entirely all) of most people’s investment needs, allocation funds are sometimes dubbed “portfolios in a can.”
But not everyone is satisfied with just two assets. Indeed, advisors frequently suggest allocating 5% to 10% in “alternative assets,” which can include “real assets” such as real estate or commodities, and more recently, cryptocurrencies like Bitcoin and Ethereum.
Historically, though, those assets haven’t been made available alongside both stocks and bonds. Thus, investors looking to own as much as they can in as few instruments as possible have had to augment their allocation coverage by owning individual real estate investment trusts (REITs), REIT ETFs, physical real estate, cryptocurrencies, and/or cryptocurrency funds.
The VanEck Wealth Builder ETF has changed that.
“The traditional 60/40 portfolio was built for a different investment landscape. An asset allocation that extends beyond stocks and bonds to include real assets gives investors the potential to perform across a wider range of economic outcomes and investment regimes,” says David Schassler, Portfolio Manager and Head of Multi-Asset Solutions at VanEck. “Our Wealth Builder strategy brings together the asset classes we believe are best positioned to perform over the next decade, with a disciplined approach to managing how they fit together.”
Schassler is referring to the Wealth Builder model portfolio strategy, which provided this multi-asset exposure to financial advisors through third-party wealth management platforms.
What’s in the Fund?
Just about everything.
No, seriously. WBMO is what’s called a “fund of funds,” which is an investment fund that holds other funds to provide its exposure without managing individual holdings. And while this type of fund will often limit its holdings to within the provider’s family, VanEck ropes in State Street, Invesco, iShares, and Vanguard ETFs, among others. It’s a deep roster of 37 funds that include the likes of State Street SPDR Portfolio S&P 500 ETF (SPYM), Invesco Nasdaq 100 ETF (QQQM), and Vanguard Total International Stock ETF (VXUS) to cover its core holdings, while turning to VanEck funds for many of its more niche allocations.
Broadly speaking, the fund allocates about 60% of assets to stocks, 31% to fixed income, 7% to real assets, and 2% to Bitcoin.
But to really appreciate this fund, consider what all’s represented here:
- U.S. stocks of all market caps
- International stocks (both developed and emerging markets) of all market caps
- U.S. Treasuries
- U.S. corporate debt
- International corporate and sovereign debt
- Floating-rate debt
- Collateralized loan obligations (CLOs)
- Gold, silver, and copper
- Oil
- Real estate
- Bitcoin
This is also an actively managed fund, with VanEck picking investments and altering the mix over time. And it does this for a reasonable 0.26% in net expenses. The breakdown, in case you’re curious, is 0.15% in management fees; 0.18% in “acquired fund fees and expenses,” which is the pass-through expense cost from owning the various ETFs, and a 7-basis-point fee waiver. (A basis point is one one-hundredth of a percentage point.)
Related: 9 Best Space ETFs for Investing’s Next Frontier
Is the WBMO ETF Right for You?
If you’re looking for a one-stop shop for just about any investment you could hope to hold within your brokerage, WBMO fits the bill better than any other product I can think of at the moment.
That makes it versatile, and certainly useful, but like all things, it falls short of perfect … at least depending on what you want to accomplish.
While VanEck will manage the blend over time, it will presumably do so with a somewhat fixed allocation range. Put differently: I doubt it will stray much beyond its current 60/30/10 stock/bond/alternatives composition. Allocation funds rarely vary much—they stick to, say, a 60/40 stock/bond mix or an 80/20 mix, with many products actually putting that ratio in the fund’s name.
There’s nothing wrong with that. It just means there are two things investors should consider when they’re choosing to invest:
- The current blend for their current needs. Again, you’re getting 60% stocks, 30% bonds, and 10% alternatives. That would be entirely too conservative for many investors, especially younger investors and/or those with a high risk tolerance.
- The current blend for their future needs. An issue investors face with any allocation fund is that the mix stays the same even as their needs change. While an 80/20 fund might be appropriately aggressive for you while you’re in your, say, 40s and 50s, you might want something more restrained in your 60s and 70s. That fund likely isn’t changing, which means you’ll likely need to tweak your portfolio to suit. The only true “set-it-and-forget-it” products are target-date funds, which actually change their allocations over time to match investors’ evolving requirements as they age.
Again, there’s nothing novel here—you’d be mulling the same considerations no matter the allocation fund in question. And the fix is a relatively easy one: augmenting your portfolio with one or two additional ETFs to provide your ideal personal mix. Sure, that means abandoning the idea of a single-holding portfolio, but that’s a pipe dream for most of us anyways.
In short: VanEck Wealth Builder ETF lets you invest in virtually everything, via a single ticker, for a reasonable fee. Even if you had to tinker with exposure by owning an additional fund or two, building a portfolio around WBMO would allow for a level of simplicity you previously could only dream of.
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