Cambria Foreign Shareholder Yield ETF
) towards the end of last year, Cambria is looking to continue its
expansion, as it just released its third product focused on
developed and emerging markets.
The newly launched fund by Cambria -
Cambria Global Value ETF
(GVAL) - comes at a time when both the developed and emerging
markets are trying to find their footing following woes from China
and Russia, as well as the wind-down of quantitative easing by the
Fed. Below we have highlighted the fund in greater detail (read:
3 Global ETFs for A Diversified Portfolio in
GVAL in Focus
The newly launched passively managed ETF looks to track the
performance of the Cambria Global Value Index. The index provides
exposure to stocks with strong value characteristics from developed
and emerging countries. As such, the fund provides an opportunity
to invest in some of the cheapest markets in the world on long-term
The index selects the desired countries to invest in from a group
of 45 countries located in various developed and emerging
markets. The fund currently holds 99 stocks from the 11 most
undervalued developed and emerging countries (read
: Emerging Market ETFs: Any Bright Spots?
Currently, Greece, Russia, Ireland, Hungary, Spain, Austria,
Brazil, Czech Republic, Israel, Italy and Portugal are the
countries included in the index. While Greece and Russia have 9%
allocation each in the fund, Czech Republic and Hungary have a 4%
allocation in the fund. All the other seven countries have 10%
allocation each in the fund.
Sector-wise, Financials dominates the fund with 28% allocation,
while Materials (15%) and Utilities (13%) occupy the next two
spots. Also, the fund includes stocks from the entire range of
market cap. While large caps rule the fund with more 50% of the
assets, mid-caps form 34%, with the rest occupied by small caps.
The fund charges 69 basis points as fees.
How could it fit in a portfolio?
The fund could be a good choice for value investors with a global
market focus. A value investing strategy gives investors an
exposure to stocks that are trading below their intrinsic values
and are considered to be cheap relative to other stocks.
Value stocks usually have low price-to-earnings ratios, low
price-to-book ratios and high dividend yields, as compared to their
growth counterparts (read:
Top Ranked Small Cap Value ETF in Focus: SLYV
Moreover, the fund's exposure to numerous emerging and developed
market countries is expected to provide huge diversification
benefits to investors.
However, investors should keep in mind that value investing has its
own set of risks. 'Cheap' shares can get cheaper and cheaper in a
downtrend market scenario, thereby exposing investors to negative
returns. Moreover, returns provided by value stocks might be lower
than the ones provided by growth companies.
Also, investors should note that the ETF will be subject to severe
currency risk as it is exposed to assets denominated in a variety
of currencies. The risk was clearly felt recently, when most of the
emerging markets saw their currencies falter in the wake of winding
down of the Fed's stimulus package. As such, the product is most
suitable to long-term investors, willing to bear any currency
volatility in the short run (read:
Can Rate Hikes Save these Emerging Market ETFs?
The newly launched product is likely to face competition from quite
a number of funds prevalent in the global equities space. GVAL is
costly compared to most of the well-known funds in this space,
given the fact that the average expense ratio in this space is 52
Vanguard FTSE All-World ex US Index Fund
) dominates this space with assets worth $11.6 billion. The fund
seeks to track the FTSE All-World ex US Index, giving investors
exposure to a basket of 2,200 stocks in 46 countries, from both
developed and emerging markets around the world. The fund charges
15 basis points as fees.
iShares MSCI ACWI Index Fund
Vanguard Total World Stock ETF
Vanguard Total International Stock ETF
iShares S&P Global 100 Index Fund
) are some of the other funds focusing on the global equities
Though slightly expensive, the newly launched product is worthwhile
for investors seeking to participate in the global recovery and
looking to add diversification benefits to their portfolio.
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