Cambria Funds rolled out a go-anywhere ETF-of-ETFs today. The Cambria Trinity ETF (TRTY) can invest in a wide range of asset classes in order to capture the performance of the value, momentum and trend-following factors, among others.
TRTY comes with an expense ratio of 0.66% and lists on the Cboe exchange. Cboe Global Markets is the parent company of ETF.com.
“The challenge for investors with a buy-and-hold strategy is the drawdowns,” said Cambria CEO and Chief Investment Officer Meb Faber. He notes that the portfolio combines a buy-and-hold approach with trend-following strategies.
“Hopefully [that] will reduce volatility, reduce drawdowns, add noncorrelation and allow investors to stick with the plan when times are tough,” Faber added. He points out that Cambria has been offering the strategy as a separate account for several years; however, some investors couldn’t allocate to an SMA, and requested the strategy in an ETF wrapper.
To target the momentum and trend-following factors, the underlying index relies on quantitative and algorithmic models to target assets for investment that are seeing their prices increase relative to other asset classes and to short asset classes that are trending downward. Meanwhile, other holdings are selected for their exposure to shareholder yield or managed futures strategies, according to the prospectus.
Cambria uses its own ETFs in TRTY’s portfolio as well as the ETFs of other issuers when necessary. The document notes that the portfolio currently holds 17 ETFs, with a breakdown of 16% in equities, 24% in fixed income, 44% in trend following strategies and 16% in asset classes such as currencies, commodities and real estate. Faber says that ultimately the fund offers exposure to 20,000 securities around the world.
He notes that the “Trinity” name that the fund carries refers to two different aspects of the fund. For one thing, it targets three categories of assets: global bonds, global stocks and global real assets.
“It’s kind of like the three legs of a stool,” Faber said.
The Trinity name also refers to the trio of strategies the firm implements in the fund, or value, momentum and trend following.
“You won’t see as many market-cap-weighted indexes or exposure in this fund,” he added.
The fund is Cambria’s 11th ETF. In all, the firm has more than $700 million in assets under management invested in those funds.
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