Daily ETF Watch: Cambria Payout ETF Live

December 03, 2013

It’s a play on dividend-paying as well as share-buyback stocks.

Cambria Investment Management today is launching the Cambria Foreign Shareholder Yield ETF (FYLD), an international version of the so-far successful Cambria Shareholder Yield ETF (SYLD | C-42), which has attracted $172 million so far this year.

The new fund, like its domestic predecessor, screens for dividend-paying companies and those that are carrying out share-buyback strategies.

While dividend ETFs have been popular with investors in the current market given the low bond yields, the coming “tapering” of the Federal Reserve’s easy-money monetary policies may put a damper on dividend strategies, forcing investors to look for returns in other corners of the market.

One such corner may be stock-buyback strategies, whereby stocks perceived to be undervalued are gobbled up by management teams, a process that reduces the supply of shares in the market while potentially boosting share prices.

FYLD will track the Cambria Foreign Shareholder Yield Index, which is made up of stocks with high cash distribution and share buyback characteristics in foreign developed countries.

“We think dividend funds are doing it wrong and we think it is a very basic mistake,” Mebane Faber, founder of Cambria Investment, said in a telephone interview.

“Focusing on dividends ignores the way a lot of these companies are using their cash flows. Some companies only pay dividends, some only do stock buybacks and there are some that do a combination of both. If you only focus on one or the other, you get an incomplete view of the overall picture,” he added. “Which would you take—a $20 bill or a $20 bill with a gift card?”

The fund has a net expense ratio of 0.59 percent, or $59 for every $10,000 invested.

There were no other filings or launches this morning.


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