The Cambria ETF Trust and its investment manager, Cambria Investment Management, LP, today launched the Cambria Sovereign High Yield Bond ETF (NYSE Arca: SOVB) on Tuesday, February 23, 2016. Here is a synopsis of the new ETF:
FUND INFORMATION:
| Symbol: SOVB | Exchange: NYSE Arca |
| Name: Cambria Sovereign High Yield Bond ETF | Net Expense Ratio: 0.59% |
FUND OBJECTIVE:
The Cambria Sovereign High Yield Bond ETF is an actively managed ETF which seeks income and capital appreciation from investments in securities and instruments that provide exposure to sovereign and quasi-sovereign bonds.
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 sovereign and quasi-sovereign high yield bonds (junk bonds). For the purposes of this policy, sovereign and quasi-sovereign high yield bonds include such securities and instruments that provide exposure to such securities, including exchange-traded products (ETPs), exchange-traded funds (ETFs) and exchange-traded notes (ETNs) that invest in or have exposure to such bonds.
The Fund will invest in emerging and developed countries, including countries located in the G-20 and other countries. Potential countries include, but are not limited to, Argentina, Australia, Brazil, Canada, Chile, China, Colombia, members of the European Union, Hong Kong, India, Israel, Indonesia, Japan, Malaysia, Mexico, New Zealand, Norway, Peru, the Philippines, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and the United States.
Sovereign bonds include debt securities issued by a national government, instrument or political sub-division. Quasi-sovereign bonds include debt securities issued by a supra-national government or a state-owned enterprise or agency. High yield bonds are those that, are rated below investment grade by Moody’s Investors Service, Standard & Poors or Fitch Ratings, or are determined by Cambria Investment Management, L.P. (investment adviser), to be of such credit quality. The sovereign and quasi-sovereign bonds that the Fund invests in may be denominated in local and foreign currencies. The Fund may invest in securities of any duration or maturity.
The Fund may invest up to 20% of its net assets in ETPs, including ETFs and ETNs, that invest in or provide exposure to sovereign and quasi-sovereign bonds, money market instruments or other high quality debt securities, cash or cash equivalents.
Cambria utilizes a quantitative model to select sovereign and quasi-sovereign bond exposures for the Fund. The model reviews various characteristics of potential investments, with yield as the largest determinant. By considering together the various characteristics of potential investments, the model identifies potential allocations for the Fund, as well as opportune times to make such allocations. Screens exclude foreign issuers whose securities are highly restricted or illegal for U.S. persons to own, including due to the imposition of sanctions by the U.S. Government. SOVB is expected to pay income on a quarterly basis.
Top Country Weights (02/23/2016):
| India | 9.9% |
| Indonesia | 8.7% |
| Brazil | 8.0% |
| South Africa | 6.2% |
| Russia | 6.2% |
| Greece | 6.2% |
| China | 5.9% |
| New Zealand | 5.2% |
| Peru | 5.0% |
| Chile | 5.0% |
Useful Links:
SOVB Home Page
ETFtrack comment:
Here is a comment from Meb Faber, Cambria Chief Investment Officer:
“Foreign bonds are the largest asset class in the world, yet dramatically underrepresented in investor portfolios. Moving away from a market-cap strategy and employing a value lens to foreign government bonds could help investors gain smarter access to income in a yield-starved environment.”