All three of these top fund-of-funds ETFs offer substantial diversification.

SPDR SSgA Global Allocation ETF (GAL)

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In March 2022, I highlighted the SPDR SSgA Global Allocation ETF (NYSEARCA:GAL) as one of the picks for asset allocation. GAL now holds 18 ETFs, with key holdings such as SPDR S&P 500 ETF Trust, SPDR Portfolio Developed World ex-US ETF, and SPDR Portfolio Emerging Markets ETF making up a significant portion of its $241.1 million in net assets.

With an expense ratio of 0.35%, GAL offers a diversified mix with a focus on equities, fixed-income investments, and cash.

Global X Thematic Growth ETF (GXTG)

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The Global X Thematic Growth ETF (NASDAQ:GXTG) is a thematic fund-of-funds designed to capture growth opportunities arising from transformative technological shifts. This innovative ETF, with an MER of 0.50%, tracks the Solactive Thematic Growth Index, comprising various Global X thematic ETFs.

While GXTG has taken a contrarian stance with its performance, it holds potential in sectors like technology, materials, and utilities, with key country exposures in the U.S., China, and Japan.

First Trust Dorsey Wright Focus 5 ETF (FV)

The Vanguard of ETFs: The First Trust Dorsey Wright Focus 5 ETF

The First Trust Dorsey Wright Focus 5 ETF (NASDAQ:FV) stands tall as the final fund-of-funds ETF recommendation. Morningstar.com applauds it with a resounding five-star rating for its risk-adjusted returns over the past 5 and 10 years. This ETF comes with a 0.90% charge, encompassing an annual management fee of 0.30% and 0.60% in acquired fund fees from the five esteemed First Trust ETFs it holds. The fund-of-funds mirrors the commendable performance of the Dorsey Wright Focus Five Index.

Diving into the Investment Strategy

Dorsey, Wright & Associates (DWA) leads the charge as the index provider for this ETF. It employs a method that starts by embracing all of First Trust’s sector and industry ETFs. Subsequently, each fund undergoes rigorous ranking based on price momentum. Only the top five ETFs with the most impressive relative strength secure a spot in the index.

The Dynamic Evolution of the Index

On a bi-monthly basis, DWA meticulously conducts relative strength analysis. ETFs that lose favor and momentum against their First Trust peers face removal from the index. This leads to a rebalancing act where each of the revered five ETFs accounts for a significant 20% and enjoys equal weighting. This regular churn ensures that the index is always at the razor’s edge.

Into the Financial Behemoth

This behemoth in the investment landscape entered the market in March 2014, swiftly amassing a colossal $3.75 billion in net assets. This figure is a testament to the unwavering popularity this fund-of-funds ETF commands among investors who eagerly seek out its tactical asset allocation prowess. The extra fees associated with this ETF? Worth every penny.