An ETF of ETFs is a fund-of-funds structure that holds a portfolio of other ETFs rather than purchasing individual security assets. While marketed to retail investors as a simplified asset allocation tool (e.g., iShares Core Moderate Allocation ETF AOM(0.20%), SPDR SSGA Multi-Asset Real Return ETF RLY(.50%)), this structure is inefficient for sophisticated wealth management.
It imposes a double layer of fees—charging an administrative management fee on top of the underlying ETFs’ expense ratios. For high-net-worth portfolios, it is far more cost-effective and tax-efficient to buy and hold the individual constituent ETFs directly, maintaining precise control over asset allocation and tax-loss harvesting.