We have spoken about the prevalence of stock buybacks in the marketplace currently and illustrated several ETF strategies that are predicated on companies that are actively buying back their stocks in the open market, and today we highlight yet another fund that screens equities for buyback characteristics.
FYLD (Cambria Foreign Shareholder Yield ETF, Expense Ratio 0.59%) debuted in December of last year, and will be celebrating its one year live anniversary in a few weeks, and the fund has notably raised more than $67 million since inception.
It tracks a proprietarily driven index known as the “Cambria Foreign Shareholder Yield Index” and screens internationally based stocks that are larger than $200 million in market cap for “high cash distribution characteristics”.
According to fund literature, the methodology then narrows this universe down to optimally one hundred names “with the best combined rank of dividend payments and net stock buybacks, which are the key components of shareholder yield.
The Index also screens for value and equity factors, including low financial leverage.” If model managers, advisors, or individual investors are not familiar with the concept of “Shareholder Yield,” they will likely become more acclimated with it especially if the environment that we are in (net stock buybacks are prevalent) persists several years out. FYLD as its name suggests, focuses only on foreign companies and thus as one would expect the fund has exposure to ordinary shares that are locally listed among its holdings.
FYLD follows the growing SYLD (Cambria Shareholder Yield ETF, Expense Ratio 0.59%), which debuted also in 2013 but in May, and that ETF has raised more than $212 million in assets since inception, with rising trading volume over time as well (about 36,000 shares ADV).