Market Overview

Shareholder Rewards For Investors In This New ETF

Shareholder Rewards For Investors In This New ETF

Cambria Funds is taking the cornerstone concepts of the Cambria Shareholder Yield ETF (Cambria ETF Trust (NYSE: SYLD)) and the Cambria Foreign Shareholder Yield ETF (NYSE: FYLD) and putting them to work in the new Cambria Emerging Shareholder Yield ETF(BATS: EYLD).

In The Blink Of An Eye

The new ETF follows the Cambria Emerging Shareholder Yield Index, which is comprised of companies displaying favorable shareholder rewards trends.

“The initial screening universe for this Index includes stocks in emerging market countries with market capitalizations over US $200 million. The Index is comprised of the 100 companies with the best combined rank of dividend payments and net stock buybacks, which are the key components of shareholder yield. The Index also screens for value and quality factors, and for companies that demonstrate low financial leverage,” according to California-based Cambria.

Related Link: A New ETF Avenue For EM Sovereign Debt

EYLD is true to its mission of avoiding companies with high financial leverage, a theme that is highlighted by the new ETF's sector allocations. Telecom and utilities stocks, which are often carry heavy debt loads, combine for just 7 percent of EYLD's weight. Conversely, tech stocks, which even in emerging markets have impressive balance sheets, are the new ETF's largest sector exposure at 20 percent. Energy, financial services and consumer discretionary names combine for half of EYLD's weight.

“Free cash flow has long been emphasized by investors as a key predictor of a company’s strength. Companies that pay cash dividends, one indication of strong free cash flow, have historically outperformed the broader market,” according to Cambria.

Not A Dedicated Dividend ETF

Although EYLD has “yield” in its name, it is not a dedicated dividend ETF. Rather, the ETF, like the aforementioned FYLD and SYLD, combines dividends, share buybacks and net debt reduction to identify companies with favorable cash flow trends.

South Korea and Taiwan are EYLD's two largest country weights, combining for 37 percent of the new ETF's weight. Those are two of the least volatile emerging markets and also two of the developing economies with the largest technology industries.

China is EYLD's second-largest country exposure behind South Korea at 20 percent. EYLD features light exposure to highly volatile emerging markets. For example, Brazil, India and Brazil combine for just 18 percent of the new ETF's weight.

EYLD charges 0.69 percent per year, or $69 for every $10,000 invested.

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