In a recent episode of “Behind the Ticker,” Meb Faber, CEO and CIO of Cambria Investments, shares insights into his career journey and the innovative investment strategies employed by his firm. Faber, who has a background in engineering and biotech, founded Cambria Investments and has led the firm to manage approximately $2.5 billion in assets. Based in Manhattan Beach, California, Cambria is known for its quantitative, rules-based investment approach. Over the past decade, the firm has launched 15 funds, attracting over 150,000 investors worldwide.
About Meb Faber and Cambria Investments
Faber emphasizes Cambria’s commitment to launching funds that fill gaps in the market. The firm’s investment philosophy revolves around creating ETFs that either don’t exist or are implemented significantly better or cheaper than existing options. This approach has led to the development of a diverse range of ETFs, all backed by substantial academic and practitioner research. Faber’s passion for educating investors is evident through Cambria’s free research service, the Idea Farm, which curates valuable investment insights for over 100,000 subscribers.
Investment Strategy and Approach
A significant portion of the discussion centers around Cambria’s Shareholder Yield ETFs, particularly SYLD, which focuses on U.S. stocks. Shareholder yield goes beyond traditional dividend yield by incorporating net stock buybacks, providing a more comprehensive measure of a company’s return to shareholders. Faber explains that the methodology behind these ETFs includes screening for companies with high shareholder yield, favorable valuation metrics, and strong financial health. The final selection process also considers intermediate-term momentum to avoid value traps.
The Shareholder Yield ETFs, including SYLD, FYLD (foreign developed markets), and EYLD (emerging markets), are designed to offer investors high-quality, cash-generating businesses at attractive valuations. These funds aim to provide superior risk-adjusted returns compared to traditional dividend-focused strategies. Faber highlights the current undervaluation of international and emerging market stocks, making them attractive investments given their potential for significant returns.
Portfolio Construction and Implementation
Faber also touches on Cambria’s trend-following strategies, which serve as a premier diversifier in portfolios. These strategies have proven effective during market downturns, offering protection and opportunities for gains in various market conditions. The firm continues to innovate and expand its ETF offerings, guided by the principle of creating products that Faber and his team would invest in themselves. For more information about Cambria and its range of ETFs, investors can visit CambriaFunds.com.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Meb Faber covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
Today we have on Clark Allen, he's the head of ETFs at Horizon Investments. We talk about the firm, we talk about their two ETFs that they just launched, but we are mostly focusing today on BenJ, which is BENJ, the Horizon Landmark ETF, which is really a cast management strategy using box spreads. It's offering a T-Bill plus like return, but the kicker is it is not kicking off income. So we talk about that strategy. We also briefly touch on HBTA and the firm's plans to launch more product.
And so that helps you stomach the volatility that you are probably taking on with the equity risk that you likely need to have a high probability success. But with a high liquidity bucket, if you just ignore the fact that you're getting volatility in your equity portfolio, or even equity fixed income mix, and just focus on your liquidity bucket, that's going to be able to provide you the spending you need to meet your needs. And so this is an ETF that's designed specifically to fit that liquidity bucket.
Market Context and Positioning
It can be similar, white label and additional costs that comes with that. We have hired a trading sub advisor to allow us to scale pretty quickly because we've traded mutual funds, we've traded resumes, but there's a lot more to trading ETFs in terms of the in-kind process, the APs dealing with the market makers, the exchange, and there's a lot of different other pieces that we work familiar with. And so coming to market with this many ETFs, let's just, we said, let's just partner with somebody that's really good and we'll come up with the strategy, we'll come up with the distribution, and we'll let them do the trading and execution on our behalf.
And so we've launched a custom portfolio business, which is custom estimates, attack management. And then even more recently, now we've launched our first two ETFs, and we just filed for seven more, and there will be more to come this year where we're coming pretty quickly into the Active ETF space, and simply because we see that there's a need. And again, we have solutions, and we see that there's gaps in those solutions that are offering advisors, and we want to be able to have product to fill those needs and really serve these advisors.
And so I came here originally was just focused on the point research, the director of content research, portfolio management as well. And then more recently we've entered the ETF space and so it was promoted ahead of ETFs and overseeing not just sort of research efforts, but also execution and launching of our ETF business. It's funny, you and I have fairly similar backgrounds. I did public accounting, but I was on the tax side and I lasted about one tax season and it was like that's enough for me.
Notable Insights
"But ETFs have really been at the core of everything, and that's why we sell advise ETFs for first trust, and it's really what's given us is the confidence that come to market with so many ETFs this year, because we understand how ETFs work."
Key Takeaways
- Faber emphasizes Cambria’s commitment to launching funds that fill gaps in the market.
- A significant portion of the discussion centers around Cambria’s Shareholder Yield ETFs, particularly SYLD, which focuses on U.S.
- The Shareholder Yield ETFs, including SYLD, FYLD (foreign developed markets), and EYLD (emerging markets), are designed to offer investors high-quality, cash-generating businesses at attractive valuations.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Meb Faber highlights important considerations around fixed income. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of fixed income and income investing discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Meb Faber, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.