GMOM Investment Case
The Cambria Global Momentum ETF (NYSE: GMOM) utilizes a quantitative approach to actively manage a diversified portfolio of world asset classes. Global Momentum is a long-term trend following strategy with strict risk control methods that are completely systematic. Research performed by Cambria and set forth in Meb Faber's white paper A Quantitative Approach to Tactical Asset Allocation (first published in 2006 and then updated in 2013) shows that historically sorting assets based on trailing measures of momentum and trend has led to outperformance.
The Cambria Global Momentum ETF (the "Fund") seeks to preserve and grow capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, independent of market direction. The Fund intends to target investing in the top 33% of a target universe of approximately 50 ETFs based on measures of trailing momentum and trend. The portfolio begins with a universe of assets consisting of domestic and foreign stocks, bonds, real estate, commodities and currencies.
Why Invest in GMOM
- Classic Momentum Investment Approach - A long-held pillar of momentum investing provides that investors should buy the assets that exhibit trailing outperformance over a medium term timeframe. The GMOM portfolio intends to invest in the top 33% of what the Cambria identifies as the most liquid, least expensive, and representative ETFs in the world.
- Combining Trend with Momentum - One challenge of momentum investing is that a long only exposure can expose the investor to long bear markets. GMOM allows the investor to exit to the potentially lower volatility of cash and bonds when the high momentum ETFs are trading below their long term trend metrics.
- Removing Emotional Decision Making - One of the difficulties of investing is the ability to stay the course when markets are volatile. The Cambria Global Momentum ETF rebalances monthly into assets that are trading with strong momentum and in an uptrend over the medium term of approximately 12 months with systematic rules for entry and exit.
- Go Anywhere Style - While the fund is concentrated in only a select basket of ETFs, it has the ability to choose from all of the investable assets around the world that exhibit the most favorable momentum and trend characteristics.
- ETF Benefits - Investors will receive the benefits and flexibility of the ETF vehicle, including the ability to be traded using limit and stop loss orders as well as on margin, intraday pricing, transparency of holdings, lower expense ratio, and a single-share investment minimum, all underlying Cambria's actively managed, risk-controlled portfolio design.
The Cambria ETFs are distributed by ALPS Distributors Inc., 1290 Broadway Suite 1000 Denver CO 80203, which is not affiliated with Cambria Investment Management, LP, the Investment Adviser for the Fund. Check the background of ALPS on FINRA's BrokerCheck.
The Cambria Sovereign Bond ETF was formerly known as The Cambria Sovereign High Yield Bond ETF.
EYLD, FYLD, GAA, GMOM, GVAL, SOVB, SYLD, TAIL, TOKE, TRTY, and VAMO are actively managed using proprietary investment strategies and processes. There can be no guarantee that these strategies and processes will produce the intended results and no guarantee that the Fund will achieve its investment objective. This could result in the Fund's underperformance compared to other funds with similar investment objectives.
ETFs are subject to commission costs each time a "buy" or "sell" is executed. Depending on the amount of trading activity, the low costs of ETFs may be outweighed by commissions and related trading costs. Shares are bought and sold at market price (closing price) not net asset value (NAV) are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.
There is no guarantee that the Fund will achieve its investment goal. Investing involves risk, including the possible loss of principal. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from social, economic, or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Bonds and bond funds are subject to interest rate risk and will decline in value as interest rates rise.
Investments in sovereign and quasi-sovereign debt obligations involve special risks not present in corporate debt obligations. The issuer of the sovereign debt or the authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of a default. Investments in commodities are subject to higher volatility than more traditional investments. The fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund's gains or losses. The use of leverage by the fund managers may accelerate the velocity of potential losses. The Fund employs a "momentum" style of investing that emphasizes investing in securities that have had higher recent price performance compared to other securities. This style of investing is subject to the risk that these securities may be more volatile than a broad cross-section of securities or that the returns on securities that have previously exhibited price momentum are less than returns on other styles of investing or the overall stock market. Investments in smaller companies typically exhibit higher volatility. Diversification may not protect against market loss. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Buying and selling shares will result in brokerage commissions. Brokerage commissions will reduce returns.
There are special risks associated with margin investing. As with stocks, you may be called upon to deposit additional cash or securities if your account equity declines.
On June 1, 2020, SYLD’s and FYLD’s investment objective and investment strategy changed. FYLD and SYLD went from being passively managed to actively managed on that same date.
On July 1, 2020, GVAL’s and EYLD’s investment objective and investment strategy changed. FYLD and SYLD went from being passively managed to actively managed on that same date.