FIRE Funds launched two new ETFs today designed to support the financial independence, retire early (FIRE) investment strategy. The FIRE Funds Wealth Builder ETF (FIRS) and the FIRE Funds Income Target ETF (FIRI) aim to help individuals attain early retirement by building up savings and achieving financial independence. FIRS focuses on capital appreciation with a long-term time horizon.
It has a net expense ratio of 0.48% after a fee waiver. The actively managed fund primarily invests in other ETFs across four baskets representing distinct economic trends: prosperity, recession, inflation, and deflation. FIRI takes an active income-seeking approach with a net expense ratio of 0.70% after its own fee waiver.
The fund’s objective is to provide an annual target income level of 4%. It employs a barbell approach, investing in two balanced strategies.
Fire Funds new investment tools
One focuses on high-yield ETFs, while the other targets lower-volatility ETFs and cash equivalents for stability and liquidity. Michael Venuto, portfolio manager of FIRE ETFs, said, “FIRS and FIRI are designed to offer a flexible investment framework for those pursuing financial independence. 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.”
The FIRE movement, popular among millennials, traces its origins to the early 2010s. It has gained traction through online communities where investors live frugally and save up to 70% of their income to retire a decade or two before reaching the eligibility age for Social Security benefits. Venuto believes the new FIRE ETFs will appeal to these investors.
Each ETF will hold between 10 and 25 underlying ETFs. The funds are structured as funds of ETFs that only charge fees at the underlying ETF level, an attractive feature for fee-conscious FIRE investors. The success of these funds will depend on whether investors, who often prefer straightforward investments like the Vanguard Total Stock Market ETF (VTI) and use the phrase “VTI and chill,” are willing to explore more complex options.
