The exchange-traded fund world is full of articles touting the advantages of mega-firms such as Vanguard, BlackRock, Inc. (NYSE:BLK) and State Street Corp (NYSE:STT). These companies have set the bar high for delivering exceptionally transparent, diversified, low-cost liquid vehicles to every American investor.
Nevertheless, many ETF shareholders have yet to identify with the broad array of smaller firms that are pushing the envelope with their innovative funds. These companies often go unnoticed because their smaller regional size is dwarfed by the industry titans.
I’m talking about issuers such as Alpha Architect, Davis, Elkhorn, O’Shares, Realty Shares and the focus of today’s article: Cambria Investment Management.
One thing each of these firms has in common is that they seek out sound investment strategies backed by evidence-based research or a proven index methodology. Their funds may also offer closer identification with investors who are looking for sound tactical exposure or differentiation in the form of a reliable ETF wrapper.
Without further preamble, here is my take on one of the smaller firms that is doing it right.
Introducing Cambria Funds
Cambria was co-founded by Mebane Faber and Eric Richardson, who develop and manage the individual ETF strategies produced by the firm. The company has nine ETFs currently available for trading, and a host of others that are currently in registration. According to data from ETF.com, Cambria has $417 million in total assets spread among its suite of funds.
The flagship strategy is the Cambria ETF Trust (NYSEARCA:SYLD), which I have mentioned before. SYLD is classified as an actively-managed ETF that owns a basket of 100 U.S. stocks, all of which share the following characteristics: they are paying cash dividends, repurchasing shares or paying down debt on their balance sheets. These stocks are actively trying to return profits to shareholders in the form of sound financial management (e.g., shareholder yield), rather than focusing only on a single factor like high-yield payouts or share buybacks.
SYLD is on the cusp of celebrating its fourth anniversary and has delivered sound results to-date. The return since inception is similar to that of a broad-market benchmark such as the SPDR S&P 500 ETF Trust (NYSEARCA:SPY).
In my opinion, this ETF has a great deal of potential as a long-term equity strategy, with the potential for outperformance over varying market cycles. It’s also worth noting that SYLD has an international brother in the Cambria Foreign Shareholder Yield ETF (BATS:FYLD).
As you can imagine, the strategy is roughly the same, except that the focus is on developed markets outside the United States. Both funds charge an annual expense ratio of 0.59%.