Gyroscopic Investing

Just got an email alert from Mebane Faber about Cambria's new "fund of funds" ETF GAA.

http://finance.yahoo.com/news/cambria-l ... 00383.html

Many of you probably recall GTAA that he started back in 2010 - it never gained much interest and the fees were high. The new ETF will be using value and momentum strategies with annual rebalancing. Here's the current portfolio:




The tricky point about new ETF is the 0% management fee. The ER of 0.29% only includes the expenses of the underlying ETFs. I could understand if this were simply an index fund, although even index funds have expenses. But how in the world can you make money with 0 fee in an actively-managed ETF? Unless 0.29% is cut from the ETF assets AFTER the underlying fund fees are paid I don't see how else this can work. 

Does he have a good or great record with his investing strategies?

Reub wrote: Does he have a good or great record with his investing strategies?

I have respect for Meb Faber's work, he seems like a smart person and has interesting ideas on his blog.
I've kept an eye on  GTAA mainly with the hopes that he'd beat the market , but since inception (Nov 2010):

GTAA: 2.1%
TLT: 22.5%
SPY : 71.7%

It looks like from the website someone else is now managing GTAA: http://advisorshares.com/fund/gtaa

Some interesting commentary about the fund: "the failed promise of  market timing"
http://www.moneysense.ca/invest/the-fai ... ket-timing

Permanent portfolio ETFs over the same period-
PRPFX: -0.5%
PERM:  -1.8%

John Hussman seems like a very bright guy as well. Unfortunately his investment strategy has been absolutely wrong.

Reub wrote: John Hussman seems like a very bright guy as well. Unfortunately his investment strategy has been absolutely wrong.

But he'll look like a genius in the downturn.  I believe that if Hussman can't pull it off, then no one else will.  At least not available to retail investors.

Reub wrote: Does he have a good or great record with his investing strategies?

Implementing via others so far: no.

Mike59 wrote: Some interesting commentary about the fund: "the failed promise of  market timing"

The usual dreck and conflation.  You don't compare a GTAA to the S&P anymore than you do the PP.

foglifter wrote: The tricky point about new ETF is the 0% management fee. The ER of 0.29% only includes the expenses of the underlying ETFs. I could understand if this were simply an index fund, although even index funds have expenses. But how in the world can you make money with 0 fee in an actively-managed ETF? Unless 0.29% is cut from the ETF assets AFTER the underlying fund fees are paid I don't see how else this can work.

It's a semi-passive "set it and forget it" fund like the PP in that it'll only need to be rebalanced every year or two, so there's no point in charging a management fee.  If it attracts enough assets, the fund will not lose money, probably by lending out securities or whatever financial kickbacks schemes Wall Street typically engages in.

I'll probably throw a percent his way and see if he can perform on his own now instead of hooking up with Wall Street.  GTAA charged an expense ratio of over 1.5%!

Faber mentioned in an interview (can't remember which one) that GAA will funnel a percentage of its funds into the other Cambria ETFs which are money makers.  He claimed that once GAA is over $100 million then it will become profitable.