Market Overview

Looking For Value? Try Outside The U.S.

Looking For Value? Try Outside The U.S.
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Familiar advice this year, as it pertains to equity investing, includes the value is lagging here in the U.S. and if investors want to find value, it is best to look at international stocks. One exchange-traded fund that can help investors find rewards with value while adding international diversity to their portfolios is the Cambria Global Value ETF (NYSE: GVAL).

While many value ETFs look follow indexes that use traditional price-to-earnings ratios, GVAL goes further by using the cyclically-adjusted price-to-earnings, or CAPE. The Cambria Global Value Index starts with 45 developed and emerging economies and then selects the 25 percent that are cheapest based on CAPE.

“Cambria then uses a valuation composite across traditional metrics such as trailing P/E, P/B, P/S, P/FCF, and EV/EBITDA to select the 10 most undervalued stocks out of the top 30 largest stocks by market capitalization within each country,” according to Cambria.

Impressive Results

While GVAL's methodology is a departure from traditional value funds, it is hard to argue with the results. Year-to-date, the Cambria ETF is higher by 27 percent, easily topping the MSCI EAFE Index and the MSCI All-Country World Index, which are up an average of about 18 percent.

Countries in GVAL's selection universe include Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, Morocco, the Netherlands, New Zealand, Norway, Peru, Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United States, and the United Kingdom,” according to California-based Cambria.

GVAL, which is home to nearly $167 million in assets under management, only holds with market values of over $200 million.

So, What's Cheap?

With investors hearing so much about the lack of value with U.S. stocks, the next logical question is what specific markets are attractively valued? According to GVAL's top 12 geographic weight, that group includes an even split of developed and emerging markets.

The ETF allocates over 23 percent of its combined weight to Austria and Portugal and another 18.5 percent to Russia and Greece. Greece is classified as an emerging market. It has been said time and again this year that eurozone equities are inexpensive relative to the U.S. GVAL confirms as much with five eurozone economies among its largest geographic exposures.

In terms of inexpensive sectors, GVAL devotes about half its weight to financial services and materials stocks.

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Posted-In: Cambria Global Value IndexLong Ideas Specialty ETFs Eurozone Top Stories Markets Trading Ideas ETFs Best of Benzinga


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