A new ETF is on the horizon and it offers investors a new way to get exposure to businesses that return cast to their investors. The Cambria Shareholder Yield ETF (NYSEARCA:SYLD) was launched on May 14, and interest has been reasonable. The fund has grown by around 1.35 percent since its inception. In the past few days alone the ETF has garnered around $2 million in assets.
Cambria Shareholder Yield ETF Details
Ron Rowland over at ETF Daily News has written an interesting profile piece on the new ETF, looking at the reasoning behind the strategy. The fund employs an algorithm to select companies based on their free cash flow, their dividend yield, and their share repurchase program to find equities that return the most value to their investors.
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
The Cambria Shareholder Yield ETF (NYSEARCA:SYLD) invests in the stock 100 publicly traded businesses that have market caps of $200 million or more. The ETF currently has a market cap of just under $13 million, and trading remains fairly lax, due to its recent inception date. SYLS is an actively managed fund.
The reason that Cambria looks for more than dividend yield when trying to come up with a metric for shareholder value is based on several tenets, according to Rowland; “focusing on dividends alone misses the broader picture, share repurchases have historically outpaced dividends, free cash flow is a classic value investment approach, diversification is ensured through maximum sector percentage caps.”
According to Mr. Rowland, more information about the investment philosophy employed in the Cambria Shareholder Yield ETF (NYSEARCA:SYLD) can be found in Mebane Faber’s book Shareholder Yield: A Better Approach to Dividend Investing, which can be found on Amazon here. The Cambria Shareholder Yield ETF (NYSEARCA:SYLD) has an expense ratio of 0.59 percent, lower than the average ratio of actively managed funds and official information about the fund can be found in the Cambria press release on the subject at this link.
One of the interesting things about the fund is that it is neither a classic dividend fund, nor a classic income fund. The Cambria Shareholder Yield ETF (NYSEARCA:SYLD) pays a dividend once a year, but the objective of the fund is absolute return. Rowland isn’t sure how the fund will manage to meet that objective, and the company’s prospectus doesn’t outline what investors should expect in the way of returns.