GVAL - My Favorite ETF

​The Cambria Global Value ETF (GVAL) invests in the cheapest stocks in the world and rebalances the portfolio annually.  They start with a universe of 45 countries in both developed and emerging markets.  Next, they select the top 25% cheapest country stock markets using a CAPE ratio.  The CAPE ratio is the Cyclically Adjusted Price Earnings Ratio which compares the current price to 10 Year average earnings.  Studies have shown this is a superior method to the simple current year P/E ratios because single year figures can be distorted by economic cycles and other one-time events. 
 
Once they select the 11 or 12 cheapest markets in the world, they then identify the 10 most undervalued stocks out of the 30 largest stocks within each country.  They only select stocks with market capitalizations over $200M.  You end up with a portfolio of approximately 120 of the cheapest companies in the world.
 
As of March 31, 2020, the country weights were as follows:
 
Spain       10.6%
Portugal     9.7%
Greece       9.3%
Italy           9.2%
Turkey       9.1%
Brazil         9.1%
Singapore  8.1%
Russia        8.0%
Britain       7.8%
Norway     6.2%
Poland       6.1%
Other         6.8%
 
What I really like about this ETF:
 
A)I know we are always invested in the cheapest markets and the cheapest stocks in the world.
B)Knowing they rebalance annually; I don’t have to worry about selling when it becomes overvalued like most funds and ETFs.
C)It is always a good idea to have exposure outside of the U.S., especially when the U.S. market is one of the most expensive in the world.  The S&P 500 trades at 20 times earnings and 3 times book value.  GVAL trades at 6.2 times earnings and 0.75 times book value.
 
If you would like to learn more:
 
www.cambriafunds.com
 
Disclosure: Long GVAL
 
Questions or comments, feel free to email me at [email protected]
 
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