New ETFs are hitting the market on a pretty regular basis and
one of the key themes as of late has definitely been in the income
world. In continuing with this trend, upstart Cambria Investment
Management has put out another fund focusing on 'shareholder yield'
giving investors a new option in the income space.
This time, however, the fund will zero in on foreign securities
giving access to about 100 non-U.S. based firms that have favorable
characteristics on the shareholder yield front. The new fund will
trade under the name of the
Cambria Foreign Shareholder Yield ETF
and the symbol of
, and for those looking for a new option in the foreign ETF market,
we have highlighted some key details regarding this new fund below:
FYLD in Focus
FYLD looks to follow the Cambria Foreign Shareholder Yield index,
focusing on stocks with high cash distribution characteristics. The
initial screen consists of stocks in foreign developed markets that
have market caps of at least $200 million (see
What Does Your Income ETF Focus On?
In order to be included in the benchmark, companies must have the
best combined rank of dividend payments and net stock buybacks,
which Cambria views as key components of shareholder yield. The
portfolio manager believes that by focusing on both of these
characteristics-while also taking into account financial leverage
factors-- investors can tap into companies that have strong free
cash flow characteristics which may be poised to outperform.
For this exposure, the fund looks to charge investors 59 basis
points a year in fees, putting it a little high when compared to
some country ETFs, but certainly not at the extreme either. Current
expected to be at least 4%
, though the actual payout will be determined in March with the
first quarterly distribution.
In terms of the portfolio, it is well spread out among cap levels
with mid caps taking the most at roughly 40%, though large caps
(34%) and small caps (26%) receive sizable allocations as well.
Meanwhile, from a sector look, industrials take the top spot (23%),
while financials (18%) and consumer discretionary (14%) round out
the rest of the top three (see
3 High Quality Dividend ETFs to Buy This Holiday
Canada and Japan tie for the biggest exposure from a national
perspective with 18% each, while Australia (14%) and the UK (10%)
complete the rest of the top four. A number of European markets
round out the rest of the top 10, suggesting that European stocks
will dominate this fund.
"Investors have shown that they are getting smarter about their
hunt for yield, and we believe that attractively valued foreign
stocks that participate in buybacks and pay out dividends can help
meet their need for income," said Mebane Faber, Cambria's Chief
Investment Officer in a press release. "Historically, assessing
stocks based on their collective shareholder yield is a strategy
that has outperformed vanilla dividend investing."
How does it fit in a portfolio?
This fund could be a solid pick for investors seeking broad
exposure to foreign markets that has a focus on yield. It could
also be a good choice for those who believe in the shareholder
yield philosophy and that this can produce outperformance.
The ETF might not be appropriate for investors who are looking for
the cheapest choice in the space, as its expense ratio is a bit
steep compared to some, while trading volumes could be low
initially, thus possibly producing wide bid ask spreads.
Additionally, the fund might not have the highest dividend payouts
thanks to its focus on 'shareholder yield' instead of just the pure
'dividend yield' (see
11 Great Dividend ETFs
Competition and Bottom Line
In terms of other products out there in the foreign yield space,
iShares International Select Dividend ETF (
could be a tough foe. This fund has over $2 billion in assets under
management, and a 30-Day SEC payout of 4.6%.
Another popular competitor looks to be the
SPDR S&P International Dividend ETF (
as well. This fund also has more than $1 billion in AUM, while its
yield is even more impressive, coming in at 6.3% in 30 Day SEC
terms. Plus, both DWX and IDV have expense ratios that are less
than the new Cambria fund, another concerning factor.
Still, despite the heavy competition, there is at least some
interest in the 'shareholder yield' concept, as evidenced by the
Cambria Shareholder Yield ETF (
and its pretty successful launch. The fund made its debut in May
2013 and it has already amassed more than $150 million in assets
under management (see
4 Best New ETFs of 2013
Given this level of success for SYLD-- in what is also a very
crowded market-there is definitely some hope for the foreign
version of this fund as well. This will be especially true if this
fund can deliver a solid level of income, and if the product can
outperform its peers thanks to its more holistic yield
approach for foreign markets.
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SPDR-SP INT DIV (DWX): ETF Research Reports
ISHARS-INTL SD (IDV): ETF Research Reports
CAMBRIA SH YLD (SYLD): ETF Research Reports
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