It has been a busy week for Mebane Faber. The firm he co-founded has launched its first ETF, and his new book on an alternative approach to dividend investing is out.

Cambria Shareholder Yield ETF (NYSEArca: SYLD) started trading Tuesday.

The actively managed ETF incorporates the strategies outlined in Faber’s new e-book, Shareholder Yield: A Better Approach to Dividend Investing.

“The thesis is actually pretty simple,” said Faber, chief investment officer of Cambria Investment Management, in a telephone interview Tuesday. “Dividends are only one way that companies can allocate cash. It makes no sense to focus only on dividends – it’s one of the most basic mistakes in investing.”

Faber is a co-portfolio manager for the new SYLD, which will challenge popular dividend ETFs such as Vanguard Dividend Appreciation ETF (NYSEArca: VIG), iShares Select Dividend ETF (NYSEArca: DVY) and SPDR S&P Dividend ETF (NYSEArca: SDY).

However, SYLD will take a different approach than existing dividend-themed ETFs.

Aside from dividend payments, the new fund’s quantitative strategy also hunts for companies that are returning cash to investors by repurchasing shares and reducing debt.

In recent decades there have been structural and tax changes in the market that have encouraged companies to buy back shares rather than return cash to investors through dividend payments, Faber said.

“We believe a much better portfolio can be constructed with a holistic approach that includes all three measures: dividends, share buybacks and paying down debt,” he added. “And historically it has outperformed nicely compared to dividend-only and market-cap-weighted strategies.”

So the concept of “shareholder yield” goes beyond just dividend payments.

Faber said shareholder yields and traditional dividend yields can produce very different numbers for the same company.

SYLD will hold U.S. stocks with market caps of more than $200 million to focus on large, liquid stocks.

The ETF will target a minimum shareholder yield of roughly 4%. Its share-buyback screen does factor in any stock that is being issued to company management, Faber said.

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