Daily ETF Watch: Cambria Takes New Angles

New filing has hedge-fund and first-of-their-kind strategies.

Reviewed by: Heather Bell
Edited by: Heather Bell

A recent filing from Cambria Investment Management outlines plans for a diverse bevy of ETFs that will offer alternative exposures or access to previously untapped slices of the market. The nine funds, if they launch, could provide investors with unique strategies.

According to the prospectus, the Cambria Managed Futures Strategy ETF will take long or short positions in futures contracts or other derivatives tied to commodities, currencies, equities and fixed-income securities. The fund’s strategy will rely on moving averages to exploit market trends.

The Cambria Tail Risk ETF will invest in cash, U.S. government bonds and the ETFs that invest in such bonds while implementing a put option strategy to hedge away the risk of a steep market decline.

The Cambria Risk Parity ETF will invest in other ETFs that target global stocks, global bonds and real assets. It will use derivatives to achieve diversified 150% exposure to its holdings.

While the first three funds are to be actively managed, the Cambria Endowment and Family Office ETF will be tied to an index of other ETFs and based on a proprietary algorithm. The ETF’s benchmark is designed to achieve maximum positive returns while lowering volatility and keeping risk and drawdowns in check. It can hold long and short positions in a wide range of asset classes, from equities to liquid alternatives.

The index-based Cambria Omaha ETF, in a fairly obvious Warren Buffett reference, will seek to hold equities that are also held with high conviction by leading institutional investors, as determined by public filings.

The Cambria Trendfollowing ETF, like the managed futures fund, will use moving averages to exploit rising and declining market trends in commodities, foreign currencies, equities and fixed-income securities. However, the trend-following fund will track an index instead of being actively managed, and it will invest primarily in other ETFs.

The Cambria Long Short ETF is probably the most common strategy in the filing. It will look to hold a 130/70 long/short portfolio as it tracks its index. The fund will take long positions in stocks likely to go up and short positions in those likely to go down. However, it can move entirely into long positions or entirely into short positions depending on the market’s direction. The fund will use 13F filings from other investment funds to determine its holdings.

The BP Capital Long/Short MLP ETF will be actively managed and will target core midstream MLPs focused on energy infrastructure, the prospectus said. It will select its holdings via a top-down commodity forecast, a bottom-up analysis of the fundamentals, relative valuation and risk/reward comparison.

The actively managed Cambria Foreign Value and Momentum ETF will invest in undervalued non-U.S. companies as determined by a number of measures, including Robert Shiller’s CAPE ratio.

The filing did not include final expense ratios or tickers. However, it did indicate that the funds would list on the NYSE Arca.

Contact Heather Bell at [email protected].

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.