Meb Faber’s new fund from CAMBRIA GVAL is out today and reflects a lot of the CAPE work he has done on global markets. The fund lets you invest in the 25% cheapest countries in the world. Effectively, some of the worst economic performers are actually the best investments. Below is a chart and release about how the cheapest CAPEs performed last year.
The idea here is that investors are terrible at market timing and continue to buy on the high, while missing the lows. The strategy is like buying US in 09 or Thailand in the late 90’s. Today, the equivalent is Greece, Ireland, Russia…
CAMBRIA ETF TRUST LAUNCHES GLOBAL VALUE ETF (GVAL)
Newly launched ETF provides investors with access to equities in the world’s most undervalued countries, such as Greece, Ireland and Russia.
Los Angeles, California – March 12, 2014 – The Cambria ETF Trust and its investment manager, Cambria Investment Management, LP, today launched the Cambria Global Value ETF (Ticker: GVAL), a passively managed, strategic-beta ETF that tracks the Cambria Global Value Index. The fund, listed on the NYSE Arca exchange, is comprised of 100 stocks that represent the world’s eleven most undervalued developed and emerging countries, as determined by the index provider.
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In an upcoming research book by Mebane Faber, Cambria’s Chief Investment Officer, titled Global Value: How to Spot Bubbles, Avoid Crashes, and Earn Big Returns in the Stock Market, Mr. Faber shows that investors and analysts are often misguided when assessing a country’s return potential. A more accurate picture of a country’s investment value should be calculated by factoring for long-term valuation metrics, such as the cyclically adjusted price earnings ratio. Smoothing earnings out over time can identify the countries likely to see the greatest growth and help investors avoid overvalued areas that may present a bubble market.
The fund will invest in approximately 10 stocks from each of the countries included in the index. The countries currently included are Greece, Russia, Ireland, Hungary, Spain, Austria, Brazil, Czech Republic, Israel, Italy and Portugal. The fund will rebalance annually.
“A country’s long term valuation metrics provide a useful picture of its true valuation,” said Mr. Faber. “By looking at long-term valuation metrics, investors can avoid entering a market that’s highly overpriced and potentially a bubble. Based on the research to be published in our book, Global Value: How to Spot Bubbles, Avoid Crashes, and Earn Big Returns in the Stock Market, we believe long-term investors should seek a basket of countries trading at a discount to their intrinsic value.”
Eric Richardson, Cambria’s Chief Executive Officer, added that “GVAL is a strong addition to the suite of strategic-beta ETFs that we have already launched. Like the Cambria Shareholder Yield ETF (SYLD) and the Foreign Shareholder Yield ETF (FYLD), we seek to provide unique opportunities for investors through comprehensive research. Last year we launched one of the fastest growing ETFs, SYLD, and we intend to continue to launch innovative ETFs.”
ABOUT CAMBRIA INVESTMENT MANAGEMENT, LP
Cambria Investment Management, LP, based in Los Angeles, California, is a SEC registered investment management firm employing a disciplined multi-asset, global quantitative research process. Cambria provides investment management services to high net worth individuals and institutions through separately managed accounts, private funds, and public exchange-traded funds. Cambria is also the investment manager of the Cambria Global Tactical ETF (NYSE: GTAA), Cambria Shareholder Yield ETF (NYSE:SYLD) and Cambria Foreign Shareholder Yield ETF (NYSE:FYLD). Global diversification through asset allocation, coupled with prudent risk management, is the foundation of Cambria’s investment philosophy. www.cambriainvestments.com and www.cambriafunds.com.