ETF Spotlight on Cambria Global Tactical ETF (NYSEArca: GTAA), part of an ongoing series.
Assets: $187.6 million.
Objective: The Cambria Global Tactical ETF is an actively managed fund that will invest in ETFs of all the major world asset classes, including equities, bonds, real estate, commodities and currencies. The ETF “will utilize a quantitative approach with strict risk management controls to actively manage the fund’s portfolio in an attempt to control downside losses and protect capital,” according to AdvisorShares, the sponsor. “The wide diversification coupled with prudent portfolio management may allow for the fund to perform in any economic environment. The fund seeks to offer investors the potential advantage of achieving equity-like returns with reduced risk and volatility.”
Holdings: Top holdings include Vanguard REIT ETF (NYSEArca: VNQ) 9.99%, SPDR Dow Jones International Real Estate (NYSEArca: RWX) 6.15%, PowerShares DB Precious Metals (NYSEArca: DBP) 4.08%, PowerShares DB Commodities (NYSEArca: DBC) 4.03% and iShares Barclays 3-7 Year Treasury Bond Fund (NYSEArcca: IEI) 3.70%.
What You Should Know:
- The portfolio managers are Mebane Faber and Eric Richardson of Cambria, which also oversees separately managed accounts. The pair co-authored The Ivy League Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets
- GTAA has an expense ratio of 0.99%.
- Asset allocations include: Commodities 10%, Real Estate 16%, Fixed Income 11%, Cash & Cash Equivalents 22%, Foreign Currencies 10%, U.S. Stocks 17% and Foreign Stocks 13%.
- The fund will hold a diversified portfolio of 50 to 100 ETFs.
- “The portfolio is designed to produce absolute returns by following a systematic trend-following strategy that employs very wide diversification of holdings,” says Morningstar analyst Timothy Strauts in a profile of the ETF.
- “The active risk-management strategy should limit drawdowns in bear markets,” he adds. “GTAA is one of the most heavily traded active ETFs on the market today.”
The Latest News:
- While small when compared with the $2 trillion in the hedge-fund industry, GTAA is attracting investor interest as an alternative way to protect and preserve assets, with its low correlation and low fees, writes Murray Coleman for Barron’s.
- “The ETF fulfills a useful niche by offering a possibly lower-cost option for trend-following investors,” writes Morningstar analyst Samuel Lee in a look at innovative ETFs.
Cambria Global Tactical ETF - (click chart to enlarge)
Max Chen contributed to this article.