The Cambria ETF Trust and Cambria Investment Management added an actively managed core high quality equity exchange traded fund strategy that also helps investors access cheap volatility to hedge against eventual market pullbacks.
On Wednesday, Cambria rolled out the Cambria Core Equity ETF (NYSEArca: CCOR). CCOR has a 1.05% expense ratio.
The Core Equity ETF will be managed by Cambria Investment Management’s David Pursell, Mebane T. Faber and Eric W. Richardson.
“CCOR was developed to be a core holding for all types of investors, as the strategy seeks to combine the long-term compounding benefits of stocks with the goal of improving risk management to minimize portfolio drawdowns,” David Pursell, the fund’s Senior Portfolio manager, said in a note.
CCOR will try to seek capital appreciation and capital preservation with a low correlation to the broader U.S. equity market by primarily investing in U.S. equity securities that offer current dividends. The strategy focuses on high-quality companies that show prospects of long-term total returns as a result of their ability to grow earnings and willingness to increase dividends over time.
Additionally, the active ETF will sell exchange traded index call options and purchases exchange traded index put options – writing index call options diminishes the fund’s volatility, provides steady cash flow and also contributes to overall return, but it also reduces the fund’s ability to profit form increases in value of its equity position. The ETF also buys index put options, which can hedge risks from significant declines over a short period.
“The combination of the diversified stock portfolio, the steady cash flow from the sale of index call options and the downside protection from index put options is intended to provide the Fund with the majority of the returns associated with equity market investments while exposing investors to less risk than other equity investments,” according to a prospectus sheet.
Current sector weights include industrials 18.4%, information technology 16.2%, consumer staples 15.8%, health care 11.8%, financials 11.7%, energy 7.9%, consumer discretionary 6.4%, utilities 6.0%, telecom services 3.7% and materials 2.1%.
The fund has 57 holdings, with top positions including UnitedHealth Group 2.0%, Cisco Systems 2.0%, Lockheed Martin 2.0%, General Dynamics 2.0% and Altria Group 2.0%.
For more information on new fund products, visit our new ETFs category.