BAMO ETF seeks total return by combining underlying ETFs that invest in domestic and international stocks, bonds and cash-like assets, rather than tracking a single fixed index. The core of the strategy is an active asset allocation structure that allows the manager to lower or raise equity exposure depending on its view of market conditions.

It may suit long-term investors who would rather leave the adjustment of stock and bond weights to the manager's judgment than concentrate in a single asset class.

It is an actively managed ETF run by Brookstone Asset Management.

BAMO ETF uses equity, bond and cash-like underlying ETFs to adjust its exposure by asset class. Because the manager can change the portfolio composition based on market conditions and its own analysis, the manager's judgment bears more directly on performance and risk management than in a fixed-weight blended product.

• Asset allocation adjusted to market conditions instead of tracking a fixed index
• Fund of funds structure that combines stocks, bonds and cash-like assets
• Active management that allows flexible adjustment of equity weight

Assets under management (AUM) stand at $44.7M, and the expense ratio is 1.05% per year.

In a fund of funds structure, the underlying ETFs' costs as well as the product's own fee can affect the overall cost investors bear. If the manager changes the asset allocation frequently, investors need to check the composition and risk exposure regularly, more so than with a fixed-weight blended product. In periods of limited trading volume, the bid-ask spread should also be watched.

The return profile of BAMO ETF can vary with the relative movement of stock and bond markets, the weight of cash-like assets and the choice of underlying ETFs. In phases when equity exposure is raised, stock market volatility may have a larger impact, and in phases when the bond weight is larger, interest rate changes may become a more important variable.

Fund flows into asset allocation products are influenced by risk appetite, the interest rate environment and the relative appeal of stocks and bonds. Because the manager of BAMO ETF can adjust asset class weights, it is more appropriate to interpret actual portfolio changes, secondary market liquidity and the bid-ask spread together, rather than fund inflows and outflows alone.

Flexible asset allocation is its strength, but investors should also review fund of funds costs, reliance on the manager's judgment and secondary market liquidity.

Among the ETFs in the comparison table, CGBL ETF can serve as a reference for a balanced structure holding both stocks and bonds, and IALT ETF can be compared as an actively managed approach that uses alternative strategies. ALLW ETF shows an asset allocation approach that considers a variety of economic environments, while CTA ETF illustrates diversification using a managed futures strategy. DRSK ETF can be used to compare the characteristics of risk-management-focused asset allocation. These products differ in management style, costs, asset size and distribution characteristics, so it is best to check how they differ from BAMO ETF in terms of structure.

When evaluating BAMO ETF, investors should look at whether the active asset allocation structure fits their investment goals, rather than simply whether it pays quarterly distributions. Checking the composition and costs of the underlying ETFs, the actual stock and bond exposure and secondary market trading conditions together helps give a more accurate picture of the product's risk characteristics.

BAMO ETF is exposed to market fluctuations in stocks, bonds, cash-like assets and its underlying ETFs. Rising interest rates can weigh on bond prices, and a deterioration in credit conditions or volatility in overseas markets can deepen losses. Investors should also consider the possibility that the manager's asset allocation decisions diverge from expectations, as well as secondary market liquidity risk.

BAMO ETF may be worth considering for investors who want asset allocation that responds to market conditions rather than tracking a single index. However, rather than viewing it solely for its quarterly distributions, investors should also review the costs of the fund of funds structure, the consistency of the manager's judgment, liquidity and currency exposure.