Cambria Investments has come out with an actively managed options-based exchange traded fund strategy to help diminish an investment portfolio’s risk exposure to a plunge in the equities market.
Cambria Investments recently rolled out the actively managed Cambria Tail Risk ETF (BATS: TAIL). TAIL has a 0.59% expense ratio.
Mebane T. Faber, Cambria’s Chief Investment Officer, and Eric W. Richardson, Investment Advisor Representative at Cambria Investment Management, will manage the fund.
TAIL tries to provide income and capital appreciation from investments in the U.S. markets while protecting against downside risk, according to a prospectus sheet.
The active ETF will invest in cash and U.S. government bonds, and utilizing a put option strategy to manage the risk of a significant negative movement in the value of domestic equities, or more commonly known as tail risk, over rolling one-month periods.
Tail risk refers to the normal distributions beyond three standard deviation, or more skewed distributions.