New fund aims to cash in on global opportunities
Published Monday, March 31, 2014
If you’re a fan of buying low and selling high, then some (but not all) markets outside the U.S. might represent value for your portfolio.
We interviewed Mebane Faber (his first name is Scottish, pronounced “meb-bin”), a portfolio manager running about $350 million in assets. His firm recently launched a new exchange-traded fund called the Cambria Global Value ETF (GVAL). This fund invests in roughly 100 stocks in the world’s most undervalued markets, and Faber says those are – brace yourselves – Greece, Russia, Hungary, Ireland, Spain, Czech Republic, Italy, and Portugal.
It’s not that Faber dislikes American stocks; they are just not a bargain now. He argues that based on a ratio called the Schiller CAPE model, the U.S. market is actually very expensive, and for this fund, he is currently not invested in American equities. And, yes, the Schiller is Yale University economist Robert Schiller.
Faber runs other ETFs, such as Cambria Shareholder Yield ETF (NYSE: SYLD), which do currently invest in U.S. stocks.
“Japanese equities in the 1980s were a big bubble, approaching half the world’s market cap. The U.S. market is almost there,” Faber said.
Moreover, “most investors have home-country bias,” Faber said, in an interview from his Los Angeles offices.
“This is a way to get more exposure to a globally market-weighted portfolio,” he added. “Plus, we are buying the value among value.” He means the cheapest, most liquid stocks in places where either political or economic crises have crushed stock prices.
Wesley Gray of Drexel University is one of Faber’s investment research partners, and their takeaway is to buy beaten-down stocks in beaten-down markets, what Faber calls “value among value.”
“Yes, the stocks could go down further before they rebound,” Faber said, but by investing in many markets, the fund is diversified.
We’ll keep an eye on Cambria’s newest ETF and report back when performance data are available.
We wrote about Ingrid Robinson, a defrauded investor from California in the Remington Financial advance-fee scam, and she spoke last week at the sentencing hearing of Andrew Bogdanoff, the head of Remington, which operated from Arizona and Philadelphia. Bogdanoff received more than 18 years in prison for financial crimes.
Robinson shows how one person who perseveres against criminals – in this case, commercial brokers Bogdanoff and Andrew McManus, who were convicted of stealing investors’ “due diligence” fees – promising loans that never arrived – can prevail.
Robinson also met with members of Congress to push for legislation regulating commercial brokers. If a commercial broker has victimized you, contact her at Ingrid.email@example.com