Thu, 13/03/2014 - 16:01
The Cambria ETF Trust has launched the Cambria Global Value ETF (GVAL), a passively managed, strategic-beta exchange-traded fund 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 11 most undervalued developed and emerging countries, as determined by the index provider.
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, 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,” says Faber. “By looking at long-term valuation metrics, investors can avoid entering a market that’s highly overpriced and potentially a bubble.”
Eric Richardson, Cambria’s chief executive officer, says: “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.”
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