The newly launched product –Cambria Global Momentum ETF – also provides exposure to global markets and has a risk management strategy in place. It, however, focuses on multiple assets with a momentum play.
Below we have highlighted some of the details of the newly launched product:
GMOM in Focus
The newly launched ETF is a fund of funds that uses a multi-asset approach to provide income as well as capital growth by investing in other ETFs, ETNs, real estate investment trusts (REITs) and closed ended funds. GMOM seeks to provide exposure to the U.S. as well as foreign markets by investing in various asset classes including equity, fixed income, commodity and currency markets.
For this purpose the fund uses a quantitative strategy with risk management controls to provide exposure to the top performing asset classes based on the latest momentum and trend performance. The fund, however, has the flexibility to shift its funds from one asset class to another based on market conditions.
GMOM shifts its holdings into relatively less volatile assets like cash and bonds if the high momentum sectors are trading below their long-term trends.
Presently GMOM holds 17 funds with 65% allocation to stocks, 29% in fixed-income and 6% in alternative assets and is rebalanced on a monthly basis.Vanguard Extended Duration Treasury ETF (EDV), iShares Global Healthcare ETF (IXJ) and iShares MSCI Frontier 100 ETF (FM) are the top three holdings, each having a 5.9% exposure in the fund.
The active management strategy renders the fund slightly expensive with 94 basis points as fees (read: Buy These 3 Top-Ranked Mid Cap ETFs to End 2014).
How Does it Fit in a Portfolio?
The fund is an intriguing option for investors seeking exposure to multiple assets within the global economy. The momentum play provides a nice opportunity to capture the returns of the best asset classes including domestic and foreign stocks, bonds, real estate, commodities and currencies during strong bull markets.
Moreover, the fund’s strategy of shifting its assets to cash and bonds from high momentum sectors during volatile market conditions is also noteworthy. A research report by the issuer states that historically such a strategy based on momentum plays has led to out performance.
“The fund attempts to achieve better than equity like returns while still having strict risk control method,” says Mebane T. Faber, the portfolio manager of GMOM.