A New Twist on an Easy All-in-One Fund (GAA)

Charles

Cambria Global Asset Allocation EtF, which is expected to start trading Wednesday under the ticker GAA: Mr. Faber’s firm won’t charge any fees to manage a portfolio that will mostly hold funds from big-name providers such as Vanguard Group and BlackRock’s iShares unit. Investors will pay only the expenses of the underlying ETFs, which will average about 0.29% of assets, or $29 a year on a $10,000 investment.

http://www.wsj.com/articles/BL-TOTALB-2601

AndyJ

No mention of previous charge GTAA, eh WSJ? GAA won't exactly be a "different approach,' as the article says. You'd think the WSJ is big & profitable enough to do basic research and include relevant information.

Charles

Here's link to summary prospectus:

http://www.sec.gov/Archives/edgar/data/1529390/000139834414006205/fp0012402_497k.htm

Cambria Global Asset Allocation EtF (GAA)

Investment Objective

The Fund seeks to track the performance, before fees and expenses, of the Cambria Global Asset Allocation Index (“Underlying Index”). The Underlying Index is based on a proprietary algorithm of Cambria Indices, LLC (the “Index Provider”) and is designed to model absolute positive returns with reduced volatility, and manageable risk and drawdowns, by identifying an investable portfolio of exchange-traded vehicles that provides exposure to equity and fixed income securities, real estate, commodities and currencies.

Principal Investment Strategies

Under normal market conditions, the Fund invests at least 80% of its total assets in the components of the Underlying Index or in depositary receipts representing components of the Underlying Index. The Underlying Index is designed to provide diversified exposure, including inverse exposure, to all of the major world asset classes in the various regions, countries and sectors around the globe.

At each rebalance date, the Underlying Index identifies a group of exchange-traded vehicles (“ETVs”) that provide exposures of approximately 40% to equity securities, 40% to fixed income securities and 20% to other asset classes, such as commodities and currencies. The Underlying Index uses a proprietary algorithm to select ETVs and other instruments based on the exposure they provide to various investment factors, such as value, momentum and trend investing.

At each rebalance date, approximately 40% of the Underlying Index, and under normal market conditions 40% of the Fund’s total assets, will be exposed to long or short positions in foreign companies’ equity or debt securities or foreign currencies. The Underlying Index defines foreign companies as those domiciled or listed and traded outside of the U.S. The Underlying Index defines equity exposures to include ETVs that track stock indices, closed-end funds, real estate investment trusts (“REITs”), exchange-traded currency trusts, common stock, preferred stock and convertible securities of issuers of any market capitalization. The Underlying Index defines fixed income exposures to include ETVs that track fixed income indices, exchange-traded notes, securities issued by the U.S. Government and its agencies, sovereign debt and corporate bonds of any credit quality, including high yield (or “junk”) bonds. The Underlying Index defines commodity and currency exposures to include ETVs that track commodity and currency indices.

The Fund expects to employ a replication strategy in seeking to track the performance of the Underlying Index. This means that the Fund will typically seek to invest in substantially all of the components of the Underlying Index in approximately the same weights as they appear in the Underlying Index. If the Fund is unable to fully replicate the Underlying Index, it will use a representative sampling strategy. When sampling, the Fund may invest up to 20% of its net assets in instruments not included in the Underlying Index, but which Cambria Investment Management, L.P., the Fund’s investment adviser (“Cambria”), believes will help the Fund track the Underlying Index, including futures, options, swap contracts, cash and cash equivalents, and money market funds.

The Underlying Index was developed by the Index Provider, an affiliate of Cambria, and is calculated by Solactive, AG (formerly known as Structured Solutions, AG), which is not affiliated with the Fund or Cambria. The Underlying Index is rebalanced and reconstituted annually. To the extent that the Underlying Index concentrates (i.e., holds 25% or more of its total assets) in the securities of a particular sector, industry or group of industries, the Fund is expected to concentrate to approximately the same extent.

Charles

Ha...

Management Fee: 0.00%
Distribution and/or Service (12b-1) fees: 0.00%
Acquired Fund Fees and Expenses: 0.29%
Other Expenses: 0.00%
Total Annual Fund Operating Expenses: 0.29%

Old_Joe

Too god to be true. What's the catch? (Sorry about that, "Catch")

Charles

It's basically a buy & hold "balanced" index fund, although the "index" appears to be actively managed.

Costs the adviser very little to maintain.

Mebane gave us a heads-up in Chicago that something good was gonna happen.

Suspect this will get a lot of attention, especially from inside industry.

Will seek more info and update.

Break, break.

Hey Joe...we've been getting rain!

Old_Joe

YES!!!

kevindow

I see absolutely no reason to be an early buyer of this ETF. Why not track this ETF for a while, and see if assets grow, daily trading volumes increase and attractive performance develops ? Mebane Faber is smart and has noble intentions, but I have been underwhelmed with his ETF offerings: GTAA, GVAL, FYLD and SYLD.

Kevin

Charles

@kevindow.

You're tough.

I can certainly understand disappointment with GTAA, we all can, but underwhelmed by SYLD? Here are numbers thru October...





Its performance since inception has attracted the highest AUM by far of any EtF not tracking an index.

Hard for me not to like this fund.

As for GVAL, that's a long term holding by nature...most hated companies in most hated countries. So, short term at least, expect to spend time in the barrel.

I think GAA will be shot-across-the-bow at high er/fee money managers employing buy & hold tactics within the allocation strategy space. Will be interesting to see how certain Target Allocation funds, for example, stack-up against GAA going forward.

JohnChisum

This is an interesting offering for sure. The Yahoo link I am posting defines this as a ETF of ETFs and 9% of the GAA portfolio will be allocated to the other Cambria offerings. So for better or worse you will have a portion in all of their ETFs. Certainly a new breed of alt here.

http://finance.yahoo.com/news/finally-free-etf-180036016.html

AndyJ

This Mebane F. global allocation fund's apparently less tactical nature might be what eventually sets it apart from his disappointing first shot in the general category. It would have been very helpful if the WSJ writer had simply asked the question that begged (actually, shouted out) to be asked: what specifically about this new fund is going to make it more successful than GTAA has been?

By the way, there's at least one other cheap global allocation fund-of-etf's that's done fairly well: GAL, State Street's, using SPDR etf's (but typically heavier in equity than GAA appears it will be), 0.35 E.R., ~ +7.5% one year total return.

kevindow

Charles, yes I am tough, but I try my best to embrace reality. Mebane is a great guy, but I continue to think that he is throwing funds out there to see what sticks. I will continue to watch his funds, but I refuse to be an early buyer of any of his funds.

As for SYLD, it has the lowest daily trading volumes, the highest expense ratio and the lowest returns YTD and for the past year among its peers: SDOG, SDY, VYM, DVY and DLN. Despite your impressive graphics, I continue to be underwhelmed by SYLD.

However, I continue to be overwhelmed with your continued outstanding contributions to MFO, which is undoubtedly the best mutual fund forum out there !!

Thanks for all your hard work at MFO !!

Kevin

Charles

Here's link to the fact sheet for GAA...

Cambria Global Asset Allocation (GAA)

The Cambria Global Asset Allocation EtF targets investing in approximately 29 EtFs that
reflect the global universe of assets consisting of domestic and foreign stocks, bonds, real
estate, commodities and currencies.

scott

Haven't jumped into these funds after GTAA, but still like reading Meb Faber's work.