First Trust Launches 3 ETFs (FPXI, FEMB, LMBS); Cambria Debuts Global Momentum Fund (GMOM)

by on November 6, 2014 | ETFs Mentioned:

U.S. equities traded slightly higher on Wednesday, following the conclusion of the midterm elections, where Republicans managed to take control of Congress. In economic news, ADP’s private sector payrolls rose by 230,000 in October, coming in above the expected 220,000 gain. The Institute for Supply Management reading on U.S. services was also reported, coming in below expectations, though still within expansion territory. Meanwhile, the S&P 500 is on track to report third quarter earnings growth of 8% from a year prior, with more than 400 companies reporting [see also Invest Like a Billionaire: Under the Hood of the IBLN ETF].

In ETF news, First Trust introduced three new exchange-traded funds, including the international version of  its popular IPO ETF. Cambria Funds also launched a new fund this week, which is actively managed by Mebane Faber and Eric Richardson.

First Trust Introduces Three New ETFsWall Street

First Trust added three new products to its lineup, including two actively managed funds and a new IPO ETF:

  • International IPO ETF (FPXI): This fund tracks the IPOX International Index, which measures the performance of the 50 largest and typically most liquid companies that are domiciled outside the U.S. within the IPOX Global Composite Index. The IPOX Global Composite Index is constructed and managed to provide a broad and objective view of global aftermarket performance of recent IPOs and spin-offs in both emerging and developed countries during their first 1000 trading days. Before being considered for inclusion, securities must have at least six full days of trading. FPXI charges an expense ratio of 0.70%, which is 10 basis points higher than its U.S. counterpart FPX.
  • Emerging Markets Local Currency ETF (FEMB): This ETF invests at least 80% of its total assets in bonds, notes, bills, certificates of deposit, time deposits, commercial paper and loans issued by issuers in emerging market countries that are denominated in the local currency of the issuer. FEMB is actively managed and will seek to provide current income and enhance capital, while at the same time minimizing volatility. The fund charges an expense ratio of  0.85%, which is more expensive that its competitor ELD, which charges 55 basis points. 
  • Low Duration Mortgage Opportunities ETF (LMBS): This fund is also actively managed and seeks to generate current income with a secondary objective of capital appreciation. LMBS invests in mortgage-related debt securities and other mortgage-related instruments, issued by both U.S. government or non-government agencies. The fund targets an estimated effective duration of three years or less and charges an expense ratio of 0.65%.

Cambria Adds New Multi-Asset Fund

Cambria launched its Global Momentum ETF (GMOM), which is actively managed by Mebane Faber and Eric Richardson. The fund seeks to preserve and grow capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, independent of market direction. To obtain this objective, GMOM will invest in the top 33% of a target universe of approximately 50 ETFs based on measures of trailing momentum and trend.

The theory behind the fund is based on Mebane Faber’s white paper A Quantitative Approach to Tactical Asset Allocation, which shows that sorting assets based on trailing measures of momentum and trend has led to outperformance.

Commenting on the launch, Faber stated, “The Cambria Global Momentum ETF seeks to take advantage of momentum and trend in a systematic way in an attempt to protect investors from emotional decision making. The fund attempts to achieve better than equity like returns while still having strict risk control methods.”

The fund charges an expense ratio of 0.94%.

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Disclosure: No positions at time of writing.