Cambria, begun trading a new U.S. Dividend Strategy ETF, the Cambria Core Equity ETF (NyseArca: CCOR) on Wednesday, May 24, 2017. Here is a synopsis of the new ETF:
FUND INFORMATION:
| Symbol: CCOR | Exchange: NYSE ARCA |
| Name: Cambria Core Equity ETF | Net Expense Ratio: 1.05% |
FUND OBJECTIVE:
The Cambria Core Equity ETF is an actively managed equity fund which seeks capital appreciation and capital preservation with a low correlation to the broader U.S. equity market.
To achieve it investment objective, the Fund uses a combination of several strategies to produce capital appreciation while reducing risk exposure across market conditions. Under normal market conditions, at least 80% of the value of the Fund’s net assets (plus borrowings for investment purposes) will be invested in equity securities.
The Fund invests primarily in U.S. equity securities that tend to offer current dividends. The Fund focuses on high-quality companies that have prospects for long-term total returns as a result of their ability to grow earnings and their willingness to increase dividends over time. These stocks typically—but not always—will be large-cap, and will show potential for increasing dividends. The Fund seeks to be diversified across industry sectors and regions.
Under normal circumstances, the Fund also sells exchange traded index call options and purchases exchange traded index put options. Writing index call options reduces the Fund’s volatility, provides steady cash flow and is an important source of the Fund’s return, although it also reduces the Fund’s ability to profit from increases in the value of its equity portfolio. The Fund also buys index put options, which can protect the Fund from a significant market decline that may occur over a short period of time. The value of an index put option generally increases as the prices of the stocks constituting the index decrease, and decreases as those stocks increase in price. From time to time, the Fund may reduce its holdings of put options, resulting in an increased exposure to a market decline. 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.
The Fund opportunistically invests where option pricing provides favorable risk/reward models and where gains can be attained independent of the direction of the broader U.S. equity market. The Fund uses proprietary models and analysis of historical portfolio profit and loss information to identify favorable option trading opportunities, including favorable call and put option spreads. In addition, the Fund’s investment strategy, with respect to both equity investing and options trading, takes into account fundamental business and macroeconomic factors. However, the Fund employs discretionary trading models, and outputs from these models influence but do not dictate equity investment and options trading decisions. The Fund typically rebalances its equity holdings on a quarterly basis. The Fund aims to preserve capital, particularly in down markets (including major market drawdowns), by using put option spreads as a form of mitigation risk. Option positions are held until either they expire or are liquidated to either capture gains as option expirations approach or to adjust positions to reduce or prevent losses and to take other potentially profitable positions.
Top Holdings (06/09/17):
| SPY US 12/21/18 P215 | 3.433% |
| ABBOTT LABORATORIES | 2.028% |
| EATON VANCE CORP | 2.020% |
| CME GROUP INC | 1.975% |
| ALTRIA GROUP INC | 1.973% |
| UNITEDHEALTH GROUP INC | 1.963% |
| 3M CO | 1.961% |
| ILLINOIS TOOL WORKS | 1.956% |
| AFLAC INC | 1.953% |
| NORFOLK SOUTHERN CORP | 1.944% |
Useful Links:
CCOR Home Page
ETFtrack comment:
Here is a comment from David Pursell, the fund’s Senior Portfolio manager:
“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.”