Daily ETF Watch: Faber Drops 'GTAA' Role

June 06, 2014

AdvisorShares bids adieu to Meb Faber on global tactical ETF strategy.

Cambria’s Meb Faber is cutting ties with AdvisorShares, leaving his post as subadvisor to the Cambria Global Tactical ETF (GTAA)—pending shareholder approval—to focus on his own growing lineup of ETFs under the Cambria umbrella. In fact, next on Faber’s list is a planned global equities fund that would go head-to-head with GTAA itself.

Mark Yusko, from Morgan Creek Capital, will take the subadvisory role in GTAA. He is known for his expertise with endowments.

Faber’s planned Cambria Global Momentum ETF (GMOM), like AdvisorShares’ GTAA, is an actively managed tactical ETF that’s a “more aggressive” version of GTAA, according to a spokesperson for Cambria. The official said the fund remains in registration with the SEC, which limits the company’s ability to comment on the fund.

What’s already clear is that GMOM will undercut GTAA on cost. It will have a management fee of 0.59 percent, or a full percentage point lower than GTAA’s 1.59 percent price tag. The fund could come to market as soon as this next quarter.

In a letter to his clients, Faber suggested the decision to part ways reflected Cambria’s commitment to offering low-cost solutions.

“Cambria, as a fiduciary, is committed to offering the best possible investment portfolios to our investors,” Faber said.

Cambria has been managing global tactical portfolios since 2007, having already launched three ETFs under its own sponsorship, including the Cambria Shareholder Yield ETF (SYLD | B-45), the Cambria Foreign Shareholder Yield ETF (FYLD | D-41), and the Cambria Global Value ETF (GVAL).

Yusko, as the former chief investment officer of University of North Carolina’s endowment, managed $1.6 billion. Currently, as head of Morgan Creek, he oversees $4.1 billion in hedge fund and mutual fund assets.

It’s not clear how having Yusko at the helm will impact GTAA’s methodology and investment strategies.

“At the end of the day, our sole focus remains our shareholders’ best interests, and we firmly believe Morgan Creek with Mark Yusko as portfolio manager would serve GTAA very well,” said Noah Hamman, chief executive officer of AdvisorShares.

GTAA, an actively managed global macro strategy, was launched in October 2010 and currently manages $35 million in assets. Year-to-date, the fund is up more than 5 percent, in line with the S&P 500 Index. However, the fund returned slightly more than 1 percent last year, trailing the S&P 500’s 32 percent surge.

Filing

Global X has put into registration two “smart beta” funds to invest in deep value U.S. and international securities, another example of how issuers are serving up funds that are variations on broader market indexes that are reaching new highs.

The proposed Global X SuperValue U.S. ETF and the Global X SuperValue International ETF will look to invest in equally weighted common stocks that rank among the deepest value securities in their respective markets, according to the regulatory filing.

The securities of the funds’ underlying indexes are selected based on their positive and growing earnings per share for the past three years. Associated fees and tickers for the proposed funds were not made available in the filing.

The funds are going into registration at a time when the S&P 500 Index is reaching new highs after a tough start to the year, hampered by severe winter weather that was blamed for poor jobs, housing and retail data. The index is up 5 percent year-to-date after surging 32 percent in 2013.

Indexing

Stoxx Limited has licensed its Euro Stoxx Small Index to State Street Global Advisors’ latest launch: the SPDR Euro Stoxx Small Cap ETF (SMEZ), making it the first time the Euro Stoxx Small Index will underlie an ETF listed in the United States, according to the firm.

SMEZ launched yesterday, exactly when developed European markets have not only been recovering from the region’s debt crisis, but are near all-time highs. It has an expense ratio of 0.45 percent, or $45 for every $10,000 invested.

The Euro Stoxx Small Index is derived from the Stoxx Europe Small 200, and represents the eurozone small-cap stocks out of the Stoxx Europe 600. The index covers 12 eurozone countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. It currently contains 96 components.

“By licensing the Euro Stoxx Small to State Street Global Investors as underlying for an ETF, market participants in the U.S. will now also be able to participate from the performance of Euro zone small caps, which typically are associated with attractive valuations and higher growth potentials,” said Hartmut Graf, chief executive officer, Stoxx Limited, in a statement.

 

 

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