Today, FIRE Funds launched two new ETFs built to support a financial independence, retire early (FIRE) investment strategy. As the title implies, FIRE strategies are used to help people attain early retirement by building up savings and financial independence.
Building Up Savings
The FIRE Funds Wealth Builder ETF is designed to build capital appreciation with a long-term time horizon. This fund has a net expense ratio of 0.48%, following a fee waiver.
Using an actively managed strategy, FIRS primarily invests in other ETFs. The fund seeks to equally allocate underlying ETF into four different baskets. Each of these baskets represents a different economic trend.
For example, the prosperity basket largely maintains equity exposure with options strategies. Meanwhile, the recession basket tried to keep volatility low with long-short ETFs, alternatives, and cash equivalents.
Underlying ETFs within the inflation basket include a focus on commodities, real estate, and other inflation beneficiaries. Lastly, the deflation basket focuses on fixed income and bonds.
Focus on Income for Early Retirement
Meanwhile, the FIRE Funds Income Target ETF offers an active income-seeking approach. Following its own fee waiver, FIRI’s net expense ratio sits at 0.70%.
Notably, part of FIRI’s goal is to provide an annual target income level of 4%. To reach this threshold, the fund uses a barbell approach, investing in two relatively even strategies.
To build on its annual income, FIRI’s first strategy invests in ETFs that provide a high degree of yield. The fund uses a hierarchy system to choose high yield investments, prioritizing yield, income type, leverage, credit quality, and duration.
Balancing out the fund’s high yield strategy is the fund’s second strategy, which focuses on lower-volatility ETFs and cash equivalents. This selection of investments can better help the fund remain both stable and liquid.
“FIRS and FIRI are designed to offer a flexible investment framework for those pursuing financial independence,” said Michael Venuto, portfolio manager of FIRE ETFs. “ETFs are an appropriate vehicle for this community, providing transparency, tax efficiency, and low costs — important features for investors seeking to manage their wealth over time. We are excited to provide these tools that aim to support investors as they work toward their financial goals.”
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