FAAR vs VGI
FAAR vs VGI
First Trust Alternative Absolute Return Strategy ETF vs Virtus Global Multi-Sector Income Fund
Quick Verdict
FAAR has a lower expense ratio. FAAR delivered stronger 1-year returns. VGI offers more diversification with 434 holdings.
Side-by-Side Comparison
| Metric | FAAR | VGI | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 1.74% | |
| AUM | $191M | $88M | |
| Dividend Yield | 9.19% | 11.98% | |
| Holdings | 6 | 646 | |
| YTD Return | +13.94% | +1.47% | |
| 1Y Return | +19.26% | +5.12% | |
| 3Y Return (annualized) | +8.78% | +11.60% | |
| 5Y Return (annualized) | +7.33% | +2.10% | |
| Volatility (annualized) | 9.2% | 14.2% | |
| Max Drawdown | -18.8% | -63.3% | |
| Fund Family | First Trust Portfolios (US) | Virtus Investment Partners | |
| Category | Commodity | Fixed Income | |
| Inception | May 18, 2016 | Feb 23, 2012 |
FAAR vs VGI Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and Virtus Global Multi-Sector Income Fund (VGI) is a ETF from Virtus Investment Partners. Over the past year FAAR returned +19.26% while VGI returned +5.12%. Year to date, FAAR is up 13.94% versus a gain of 1.47% for VGI.
Over three years, FAAR compounded at +8.78% per year against +11.60% for VGI; over five years the annualized figures are +7.33% and +2.10% respectively. Across the full 10-year window we track, FAAR has the edge at +3.32% annualized vs -2.38%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VGI has been the more volatile fund, with annualized monthly volatility of 14.2% compared with 9.2% for FAAR. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -18.8% for FAAR and -63.3% for VGI. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.07. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while VGI charges 1.74%. On a $10,000 position that is $97 vs $174 annually, a gap of $77 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 11.98% for VGI.
Holdings Overlap
FAAR and VGI share 0 holdings out of 435 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, FAAR or VGI?
FAAR has an expense ratio of 0.97% while VGI charges 1.74%. FAAR is the cheaper option. On a $10,000 investment, that is $77 per year of difference.
Which performed better, FAAR or VGI?
Over the past year FAAR returned +19.26% vs +5.12% for VGI, so FAAR leads on 1-year performance. Over the longest common window we track (10 years), FAAR annualized +3.32% vs -2.38% for VGI. Past performance does not guarantee future results.
Which is riskier, FAAR or VGI?
VGI has been the more volatile fund at 14.2% annualized versus 9.2% for FAAR. Worst drawdown: FAAR -18.8% vs VGI -63.3%.
Should I hold both FAAR and VGI?
FAAR and VGI have a monthly-return correlation of 0.07, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FAAR and VGI?
FAAR and VGI share 0 common holdings with a 0.0% weight overlap. Combined, they hold 435 unique securities.
Which pays a higher dividend, FAAR or VGI?
FAAR yields 9.19% while VGI yields 11.98%, so VGI currently pays the higher dividend yield.
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