Cambria Global Asset Allocation ETF's Average Process Pillar and People Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy gets an Average Process Pillar. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in the Africa and Middle East region and an underweight in developed markets regions compared with category peers. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm a Below Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

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Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Cambria Global Asset Allocation ETF earns an Average Process Pillar rating. The predominant contributor to the rating is the firm's five-year retention rate of 100% over the period. The parent firm's five-year risk-adjusted success ratio of 88% also strengthens the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by the small size of its portfolio management team of one.

 Its equity sleeve has a meaningful tilt toward both smaller market-cap and value-oriented stocks versus the category average. The strategy has three region or sector biases compared to category peers. The most meaningful exposure is to the Middle East and Africa region, where the portfolio is typically overallocated. It also maintains an underweight bias to developed markets regions. Lastly, the strategy has a large and consistent overweight in the basic materials sector. 

 The portfolio is overweight in real estate and basic materials relative to the category average by 5.8 and 4.8 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and technology, underweight the average by 7.3 and 6.8 percentage points of assets, respectively. The portfolio is overweight in Developed Asia and Emerging Asia regions relative to the category average by 6.8 percentage points and 4.8 percentage points, respectively. The regions with low exposure compared to their category peers are North America and Developed Europe, underweight the average by 9.0 percentage points and 6.8 percentage points, respectively.

 The fund’s bond sleeve has higher interest rate risk as its average duration is 6.3 years compared with the category average of 4.6 years.

Average

Process

Cambria Global Asset Allocation ETF's sole listed portfolio manager has proven themself as effective as the next manager, leading to an Average People Pillar rating. Mebane T. Faber brings over 17 years of portfolio management experience to the table. Across strategies managed, Faber has an average Morningstar Rating of 3.3, indicating above-average risk-adjusted performance.  Isolating the analysis to the fund at hand, Mebane Faber has delivered a mixed track record, leading the average category peer but lagging the category benchmark for the past nine-year period. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

People

Cambria Investment Management is a small, niche exchange-traded fund provider that adequately serves its investors but carries considerable key-person risk, and recent changes raises questions.

Cambria focuses on active, systematic-equity and asset-allocation strategies that differentiate it from larger ETF firms. The firm’s ETF lineup is unique, with a focus on yield-, momentum-, and value-oriented funds as well as more-specific options such as its Cannabis ETF. Few of the firm’s 12 ETFs hold significant assets under management—its largest by far is Cambria Shareholder Yield, with USD 760 million in assets under management. The funds are priced well. Cambria hasn’t merged or liquidated funds but repurposed two since it entered the ETF business in 2013. It has also registered, but not yet launched, additional ETFs, and it’s unclear when they will be available.

Co-founder, majority owner, CEO, and CIO Meb Faber maintains a public profile that drives a notable investor following, underlining considerable key-person risk at the firm. Although Faber is largely detached from the operational aspects of the small firm, he sets the firm’s direction and is one of three investment professionals who support Cambria’s strategies (and serves as their only named portfolio manager). Cambria will add Toroso Investments as a subadvisor to its suite of ETFs effective Sept. 1, 2023. Toroso’s cofounder and CIO, Michael Venuto, had been an independent trustee on Cambria’s three-person ETF board since 2019. Venuto abstained from voting on the Toroso hire and recently resigned from the board. Although Cambria’s choice of Toroso to implement its funds’ portfolio construction is reasonable, the decision nonetheless raises questions.

Below Average

Parent

Cambria Global Asset Allocation ETF

GAA is an actively managed fund-of-funds that provides exposure to equity, fixed-income, real estate, commodities, and currencies. The fund aims for returns and reduced volatility.

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