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TheStreet Open House

Cambria Builds on Success With a Second ETF

Stocks in this article: SYLD FYLD WETF GTAA ACWX EFA

NEW YORK ( TheStreet) -- Six months ago I wrote about the then-new Cambria Shareholder Yield ETF (SYLD). The big idea is to screen the universe of domestic equities for companies that return cash to shareholders by paying dividends, buying back stock and paying down debt.

I noted that the methodology had a mountain of research behind it based on work done by Robert Shiller from Yale and to a lesser extent from Jeremy Schwartz of WisdomTree Investments (WETF). Based on the constituency of the fund I drew the conclusion that SYLD would outperform if the broad equity market continued to rally, and that has been the case. Since inception in May, SYLD is up 13.2%, according to Yahoo! Finance, compared to 8.2% for the S&P 500.

Cambria is the advisory firm run by well-known researcher and investment manager Mebane Faber, who has also had success managing the AdvisorShares Cambria Global Tactical ETF (GTAA).

The fund has also been successful in raising assets, bringing in over $100 million in its first few days of trading. Building on that success, Cambria has launched the Foreign Shareholder Yield ETF, trading under FYLD.

As the name implies, the new fund will focus foreign developed markets. The FYLD literature places less emphasis on retiring debt but the methodology selects the top 20% of stocks "by yield across dividends and buybacks." Then a "valuation ensemble" is applied to the top 20% along with a screen for momentum to produce the 100 stock constituency of the fund.

An investor interested in using FYLD would want to compare its makeup to the iShares MSCI ACWI ex-US ETF (ACWX). ACWX makes for a more accurate comparison because like FYLD it can own Canada but the more popular iShares MSCI EAFE Index Fund (EFA) cannot.

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