Cambria Global Momentum ETF's Average Process Pillar and People Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the second-lowest 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 underweight position in the communication services sector and the North America region 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.

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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 Momentum ETF earns an Average Process Pillar rating. The most meaningful 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 supports the rating. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their noteworthy 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 consistent bias toward both smaller market-cap and value-oriented companies versus category peers. The strategy has three region or sector biases compared to category peers. The most notable is its consistent underexposure to the communication services sector. It also maintains an underweight bias to the North America region. And finally, the portfolio has invested less in developed markets regions than peers. 

 The portfolio is overweight in industrials and energy relative to the category average by 10.3 and 8.1 percentage points, respectively. The sectors with low exposure compared to category peers are technology and healthcare, underweight the average by 11.8 and 9.0 percentage points of assets, respectively. The portfolio is overweight in Developed Asia and Developed Europe regions relative to the category average by 6.8 percentage points and 3.3 percentage points, respectively. The regions with low exposure compared to their category peers are North America and United Kingdom, with North America underweight the average by 22.8 percentage points and United Kingdom similar to the average.

 The fund’s bond allocation takes on more interest rate risk as its average duration is 10.1 years compared with the category average’s 4.6 years.

Average

Process

Cambria Global Momentum 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 inferior performance, lagging both the category benchmark and average peer over 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 Momentum ETF

GMOM is an actively-managed fund that selects approximately 17 ETFs, across various asset classes, based on price momentum. The fund aims for capital appreciation rather than income.

GMOM selects the top one-third of plays with robust momentum from an around 50-strong ETF group encompassing fixed income, the U.S. and foreign stocks, currency, and commodity cohorts. GMOM grossly underperformed IVV in the past, though 2022 is a solid bright spot owing to its exposure to pro-inflation plays.

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