This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

3 Reasons to Like the New Cambria ETF

NEW YORK (ETF Expert) -- Long-time readers and listeners know that I am an active manager of passive index ETFs. I favor exchange-traded index vehicles because the diversification comes with low expenses, exceptional tax-efficiency and intraday liquidity.

The media have regularly inquired why I rarely endorse the use of active ETFs. For one thing, these funds involve more frequent trading, creating a likelihood of adverse tax consequences for the shareholder. There are fewer tax concerns in an index fund that rebalances only quarterly or annually. What's more, indexes do not tend to change much, making it easy to understand what one owns.

An active ETF that you bought five months ago may not share much in common with the one that your portfolio holds today. Perhaps most important, indexing (via index ETFs) often outperforms stock picking (via active ETFs) because of dramatically lower internal expenses.

Nevertheless, there are always exceptions to a general rule. And right now, the Cambria Shareholder Yield ETF (SYLD) is on my radar screen. Here are three reasons that I may embrace the recently released Cambria Shareholder Yield ETF:

1. Reasonable Expense Ratio. According to WSJ.com, the average ETF expense ratio is 0.44%. Of course, there are many Vanguard ETFs with annual expenses closer to 0.15% and 0.2%, but it won't always be possible to get the fund that you want that cheaply. Still, when you buy an index ETF, you will not be paying 1.4% for the privilege of owning a typical mutual fund -- a privilege that may carry early redemption penalties or a loaded commission or costly year-end capital gains distributions.

When you look at the active ETF landscape, unfortunately, many are more expensive than mutual funds are. Expense ratios north of 1.4% in the active ETF world are not uncommon. Even the Cambria Global Tactical Fund (GTAA) publishes an annual fee of 1.41%. Yet the Cambria Shareholder Yield ETF offers reasonable annual expenses of 0.6%.

2. Dividends Are Wonderful, but Debt Reduction and Share Buybacks Are Spectacular, Too. Research that goes back a century often demonstrates the enormous contributions of dividends on a portfolio's total return. Some studies maintain that as much as half of a stock's total return comes from dividends over time. Until recently, though, the impact of reducing debt and/or reducing the number of shares outstanding has received less attention.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,106.70 +29.83 0.17%
S&P 500 2,000.02 +2.10 0.11%
NASDAQ 4,570.6370 +13.29 0.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs