Not a bad choice for your EM equity exposure (EYLD)

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hdas
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Not a bad choice for your EM equity exposure (EYLD)

Post by hdas » Thu Nov 14, 2019 8:12 am

I'm not a fan of Meb Faber, however his Cambria Emerging Shareholder Yield ETF seems like a decent choice for EM exposure:

Fund Inception 7/14/2016
Ticker EYLD
Net Assets $32,587,050.69
Investment Objective Equity Income
Expense Ratio 0.66%
Number of Holdings 98

I've done some research into active funds in emerging markets and didn't find anything compelling. This fund has done very well, who knows going forward.

Code: Select all

Portfolio				Initial	Final		CAGR	STD	Best Y	Worst Y	Max. DD	Sharpe Ratio	 
Vanguard FTSE Emerging Markets ETF	$10,000	$12,359 	6.73% 	13.59%	31.48%	-14.77%	-22.52% 	0.44	 
Cambria Emerging Shareholder Yield ETF	$10,000	$13,831 	10.49% 	13.73%	34.93%	-13.77%	-20.41% 	0.69	 
DFA Emerging Markets Value I		$10,000	$12,456 	6.99% 	13.56%	33.76%	-11.93%	-21.10% 	0.46	 
Cheers :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by jhfenton » Thu Nov 14, 2019 8:32 am

I agree. I wish the ER were a bit lower, but I like the methodology and characteristics of the portfolio. It avoids the dilution problem rampant in emerging markets, and it tilts small (3.51 B median market cap according to M*) and value (8.93 M* PE, 8.71 on the more conservative ETF.com PE). (In addition to shareholder yield--cash dividends and net stock buyback--the index explicitly screens for value and quality and equal weight the portfolio, so the value, size, and quality characteristics should be persistent.)

I have slowly purchased a bit over 2,500 shares of EYLD ($80K). Spreads vary widely, from a few cents to 20 cents. The ETF.com reported average spread is 32 bp, or about 10 cents. It's definitely not a trading vehicle.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by jhfenton » Fri Nov 15, 2019 3:18 pm

I gu
hdas wrote:
Thu Nov 14, 2019 8:12 am
I've done some research into active funds in emerging markets and didn't find anything compelling. This fund has done very well, who knows going forward.
I guess we're the only fans. :beer

As I said, I think the expense ratio should be cut in half. But if you compare it to EM small cap funds, it's not really an outlier.

I have not and would not touch it in taxable, but as a long-term holding in tax-advantaged, I was willing to start shifting some of our sizable vanilla emerging market investments into EYLD. (We still own a fair amount of Vanguard's VEMAX and Fidelity's FPADX, the latter in my Fidelity HSA.)

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by fennewaldaj » Fri Nov 15, 2019 10:37 pm

I like this fund too though I haven't taken the plunge and bought a significant amount. I have an EM value and an EM small value allocation so this one slots in well as a mix of those too. I do worry it will close with the very low AUM.

A semi active fund I like is Eaton Vance Parametric Emerging Market. The neat thing about this fund is that they change the country weightings such that small countries are over weighted and large ones are under weighted. Once they make there adjustments they invest in all available stocks. They also over and underweight sectors in each country. Due to the low correlation between different EM the overall all volatility ends up lower than the normal index.

https://funds.eatonvance.com/parametric ... -eitex.php

This white paper explains the process.

https://www.parametricportfolio.com/ins ... -investing

Startled Cat
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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by Startled Cat » Fri Nov 15, 2019 11:25 pm

Was anyone able to find a breakdown by country?

Edit: it's in the annual report. Relatively light on China (see "Hong Kong", at 15%), but 25% Taiwan, so still very exposed to so-called "greater China".
Last edited by Startled Cat on Sat Nov 16, 2019 1:03 am, edited 1 time in total.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by HEDGEFUNDIE » Fri Nov 15, 2019 11:51 pm

Nice find hdas

I think EYLD will pair well with my MCDFX

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by ronno2018 » Fri Nov 15, 2019 11:58 pm

That is interesting. I am so sad about VWO. It is just sits there and does nothing at all.

In theory there should be awesome growth from emerging markets. Unfortunately I think there is just too much corruption and malfeasance, lack of good governance, stability, in all EM. Maybe you can make it work with some selectivity. I do not know.

I just know the people in Chile or wherever deserve better and cleaner government and markets. I hope it happens!

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by 305pelusa » Sat Nov 16, 2019 1:05 am

ronno2018 wrote:
Fri Nov 15, 2019 11:58 pm
That is interesting. I am so sad about VWO. It is just sits there and does nothing at all.

In theory there should be awesome growth from emerging markets. Unfortunately I think there is just too much corruption and malfeasance, lack of good governance, stability, in all EM. Maybe you can make it work with some selectivity. I do not know.

I just know the people in Chile or wherever deserve better and cleaner government and markets. I hope it happens!
Lol "the people in Chile or wherever".
You do know that Chile is actually a fairly prosperous nation right? Hardworking, competitive, high income and growth. It runs a pretty clean government, with corruption as low as many first world countries. It's actually very close from achieving developed market status, will most likely do it within a few years.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by hdas » Sat Nov 16, 2019 8:52 am

305pelusa wrote:
Sat Nov 16, 2019 1:05 am
ronno2018 wrote:
Fri Nov 15, 2019 11:58 pm
That is interesting. I am so sad about VWO. It is just sits there and does nothing at all.

In theory there should be awesome growth from emerging markets. Unfortunately I think there is just too much corruption and malfeasance, lack of good governance, stability, in all EM. Maybe you can make it work with some selectivity. I do not know.

I just know the people in Chile or wherever deserve better and cleaner government and markets. I hope it happens!
Lol "the people in Chile or wherever".
You do know that Chile is actually a fairly prosperous nation right? Hardworking, competitive, high income and growth. It runs a pretty clean government, with corruption as low as many first world countries. It's actually very close from achieving developed market status, will most likely do it within a few years.
This is off topic for the thread, however, just like to point out that while Chile is prosperous relatively compared to other Latin American countries, when you look at more comprehensive measures of development like complexity of the economy, it ranks fairly low. Cheers :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by hdas » Sat Nov 16, 2019 8:57 am

jhfenton wrote:
Fri Nov 15, 2019 3:18 pm
I gu
hdas wrote:
Thu Nov 14, 2019 8:12 am
I've done some research into active funds in emerging markets and didn't find anything compelling. This fund has done very well, who knows going forward.
I guess we're the only fans. :beer

As I said, I think the expense ratio should be cut in half. But if you compare it to EM small cap funds, it's not really an outlier.

I have not and would not touch it in taxable, but as a long-term holding in tax-advantaged, I was willing to start shifting some of our sizable vanilla emerging market investments into EYLD. (We still own a fair amount of Vanguard's VEMAX and Fidelity's FPADX, the latter in my Fidelity HSA.)
For my international exposure I use:

Vanguard International Growth Fund Admiral Shares (VWILX)
iShares Edge MSCI Multifactor Intl Small-Cap ETF (ISCF)
Vanguard FTSE Emerging Markets ETF (VWO)

I don’t know yet how to open room for EYLD.

Cheers :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by 305pelusa » Sat Nov 16, 2019 9:18 am

hdas wrote:
Sat Nov 16, 2019 8:52 am
305pelusa wrote:
Sat Nov 16, 2019 1:05 am
ronno2018 wrote:
Fri Nov 15, 2019 11:58 pm
That is interesting. I am so sad about VWO. It is just sits there and does nothing at all.

In theory there should be awesome growth from emerging markets. Unfortunately I think there is just too much corruption and malfeasance, lack of good governance, stability, in all EM. Maybe you can make it work with some selectivity. I do not know.

I just know the people in Chile or wherever deserve better and cleaner government and markets. I hope it happens!
Lol "the people in Chile or wherever".
You do know that Chile is actually a fairly prosperous nation right? Hardworking, competitive, high income and growth. It runs a pretty clean government, with corruption as low as many first world countries. It's actually very close from achieving developed market status, will most likely do it within a few years.
This is off topic for the thread, however, just like to point out that while Chile is prosperous relatively compared to other Latin American countries, when you look at more comprehensive measures of development like complexity of the economy, it ranks fairly low. Cheers :greedy
I think it's totally on topic. We're discussing EM economies and, most importantly, whether active management is useful because it lets you avoid possible corruption.

My point is that you can't just lump all EM countries together. Many (Chile, Poland, etc) are actually decent economies on their way to development. That's all :)

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by jhfenton » Sun Nov 17, 2019 11:19 am

hdas wrote:
Sat Nov 16, 2019 8:57 am
For my international exposure I use:

Vanguard International Growth Fund Admiral Shares (VWILX)
iShares Edge MSCI Multifactor Intl Small-Cap ETF (ISCF)
Vanguard FTSE Emerging Markets ETF (VWO)

I don’t know yet how to open room for EYLD.

Cheers :greedy
For ex-US (50% of equities), I use

VSS/Vanguard FTSE All-world ex-US Small Cap (this is our largest holding)

VEMAX/Vanguard FTSE Emerging Markets Admiral (if the expense gap with VWO widens further, I will convert this to VWO)
FPADX/Fidelity Emerging Markets Index (in my HSA at Fidelity) (only 7.5 bp, but does not include small caps)
EYLD/Cambria Emerging Shareholder Yield

VTMGX/Vanguard FTSE Developed Markets Admiral (a new and still tiny position in my 401(k))


VTMGX is the only international index fund in my 401(k), so I am being forced by the math of retirement plan contribution limits to start using it. (My wife's new 401(k), when she's eligible in January is all American Funds--ick--so that will not help.) I had dropped VTMGX/VEA a couple of years ago in favor of all VSS, just to simplify things.

Now that all ETFs are commission-free at Fidelity, I would like to switch my FPADX to VWO. FPADX is 4.5 bp cheaper, but VWO only trails its index by 1 bp over 3 years and 2 bp over 5 years. (VWO is actually +5 bp/year over 10 years.) I assume it's due to security lending revenue from the smaller-cap EM stocks. FPADX doesn't track its index as closely. (Fidelity makes it impossible to buy an ETF and sell a mutual fund in an HSA without being out of the market for a day. I have something like $2,500 in cash in the HSA, the rest FPADX, and I would have to move my FPADX to VWO $2,500 at a time. So it would take me a month of daily purchases and sales just before the close. :oops:)

I've watched ISCF, but I haven't seen enough of a value tilt to justify its extra 28 bp of expense versus VSS, especially when VSS brings some EM small cap at that price. If I were to buy a "multifactor" fund, I would want it to be a value fund with a negative quality/junk (and maybe negative momentum) screen, not a fund that emphasizes all the factors equally. With iShares also using sector and country constraints to minimize tracking error, I am not convinced that it will earn its additional fee.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by 305pelusa » Sun Nov 17, 2019 11:39 am

jhfenton wrote:
Sun Nov 17, 2019 11:19 am

I've watched ISCF, but I haven't seen enough of a value tilt to justify its extra 28 bp of expense versus VSS, especially when VSS brings some EM small cap at that price.
How much of a value tilt would you require out of ISCF before you'd be OK buying it? Just curious.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by Wyodoc » Sun Nov 17, 2019 11:40 am

I have also been picking up EYLD in my R-IRA over last 6 months. I think some active management in EM makes sense. My other EM is through 401k with ODMAX (Invesco Oppenheimer Developing markets) with a low ER of 1.1% :oops: However, it has outperformed VEMAX by about 3% since I’ve held it as well since inception. That’s why although these active EM funds/ETFs are expensive they may make sense.... obviously who knows in the future but have been happy thus far.

My other Intl exposure is with VIGI (Vanguard Intl dividend appreciation) I like the quality tilt and good taxable fund. Also have SCZ (Ishares MSCI EAFE small cap) which I’ve been meaning to switch out for lower cost small cap fund but having trouble pulling the trigger cause the beating it puts on cheaper funds.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by pepys » Sun Nov 17, 2019 12:33 pm

hdas wrote:
Sat Nov 16, 2019 8:52 am
305pelusa wrote:
Sat Nov 16, 2019 1:05 am
ronno2018 wrote:
Fri Nov 15, 2019 11:58 pm
That is interesting. I am so sad about VWO. It is just sits there and does nothing at all.

In theory there should be awesome growth from emerging markets. Unfortunately I think there is just too much corruption and malfeasance, lack of good governance, stability, in all EM. Maybe you can make it work with some selectivity. I do not know.

I just know the people in Chile or wherever deserve better and cleaner government and markets. I hope it happens!
Lol "the people in Chile or wherever".
You do know that Chile is actually a fairly prosperous nation right? Hardworking, competitive, high income and growth. It runs a pretty clean government, with corruption as low as many first world countries. It's actually very close from achieving developed market status, will most likely do it within a few years.
This is off topic for the thread, however, just like to point out that while Chile is prosperous relatively compared to other Latin American countries, when you look at more comprehensive measures of development like complexity of the economy, it ranks fairly low. Cheers :greedy
Saying that Mexico is more developed than Canada, that Columbia is more developed than Australia, that Thailand is more developed than New Zealand, etc. isn't more "comprehensive", it's just wrong. And the website says nothing remotely matching the idea that this is a measure of development.

Chile has basically the same score as Australia on that ranking. I have no problem investing in places like Australia.
"Give me enough leverage and a fund on which to place it, and I shall move the world"

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by lazyday » Sun Nov 17, 2019 1:17 pm

jhfenton wrote:
Sun Nov 17, 2019 11:19 am
If I were to buy a "multifactor" fund, I would want it to be a value fund with a negative quality/junk (and maybe negative momentum) screen, not a fund that emphasizes all the factors equally.
If starting with value, an advantage of adding some weighting to momentum or quality is that it might reduce trading, since value has negative correlation to both.

There’s a lot of evidence for a momentum return, including out of sample tests in different regions, time periods, and assets, so personally I would be happy for it to have some weighting. I think I’d prefer to not weight quality or low vol, except in a dynamic fund that gave stronger weight to the cheapest factors. I’d be happy with screens for both vol/beta and quality.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by Wyodoc » Sun Nov 17, 2019 4:04 pm

hdas wrote:
Thu Nov 14, 2019 8:12 am
I'm not a fan of Meb Faber,
Apparently this thread was brought to his attention on Twitter. Especially the first sentence...

He posted this- “The Bogleheads hate me for some reason. Which is odd considering I manage the lowest cost World Allocation ETF.

Even worse, it’s the lowest cost AND it’s an active fund! Mind blowing...

But then again @vanguard has more active than passive funds so Bogle got it...”

I have no Problem with Meb and as above invest in this fund. I’m just amazed how well these threads travel...

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by Forester » Sun Nov 17, 2019 4:19 pm

Faber's main point is to diversify away from being all-in on megacap, and enough people here own some SC/SCV to be in the same camp as him.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by jhfenton » Sun Nov 17, 2019 7:18 pm

Wyodoc wrote:
Sun Nov 17, 2019 4:04 pm
I have no Problem with Meb and as above invest in this fund. I’m just amazed how well these threads travel...
+1 The Internet is a very public place. It's easy to forget that in what feels like a tiny corner of it. I do make sure never to post anything I wouldn't want attached to my name, which it basically is, given my username.
Forester wrote:
Sun Nov 17, 2019 4:19 pm
Faber's main point is to diversify away from being all-in on megacap, and enough people here own some SC/SCV to be in the same camp as him.
Indeed. I agree with most of what Meb advocates in his podcast. I even hold close to the global market portfolio--at least on the equity side--that Meb talks about so much--aside from overweighting EM a bit. And from the never-ending discussions of value, SCV, and other factors/tilts on here, it is clear that not every poster on here holds the three-fund (or four-fund) portfolio.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by bluquark » Sun Nov 17, 2019 8:14 pm

ronno2018 wrote:
Fri Nov 15, 2019 11:58 pm
That is interesting. I am so sad about VWO. It is just sits there and does nothing at all.

In theory there should be awesome growth from emerging markets. Unfortunately I think there is just too much corruption and malfeasance, lack of good governance, stability, in all EM. Maybe you can make it work with some selectivity. I do not know.

I just know the people in Chile or wherever deserve better and cleaner government and markets. I hope it happens!
https://www.thebalance.com/factors-driv ... ce-4147205 says the four main drivers of EM perfomance are developed market demand, domestic demand, currency trends and commodity prices. While governance issues can indirectly affect some of these, the Boglehead focus on it is out of proportion.
Last edited by bluquark on Sun Nov 17, 2019 8:17 pm, edited 2 times in total.

guyinlaw
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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by guyinlaw » Sun Nov 17, 2019 8:16 pm

Meb Faber responded in twitter
I manage the lowest cost World Allocation ETF.

Even worse, it’s the lowest cost AND it’s an active fund! Mind blowing...
Which fund is he referring to?

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by AlohaJoe » Sun Nov 17, 2019 8:42 pm

Wyodoc wrote:
Sun Nov 17, 2019 4:04 pm
hdas wrote:
Thu Nov 14, 2019 8:12 am
I'm not a fan of Meb Faber,
Apparently this thread was brought to his attention on Twitter. Especially the first sentence...

He posted this- “The Bogleheads hate me for some reason.
I don't think it is a big secret. He writes a ton of white papers on backtested active strategies. Then he launches a real world fund following the strategy, it does somewhere between mediocre and terrible, and he moves on to another backtested active strategy with little to no reflection on the previous failures.

But I don't think anyone actually cares enough to "hate" him.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by fennewaldaj » Sun Nov 17, 2019 10:12 pm

hdas wrote:
Sat Nov 16, 2019 8:57 am
jhfenton wrote:
Fri Nov 15, 2019 3:18 pm
I gu
hdas wrote:
Thu Nov 14, 2019 8:12 am
I've done some research into active funds in emerging markets and didn't find anything compelling. This fund has done very well, who knows going forward.
I guess we're the only fans. :beer

As I said, I think the expense ratio should be cut in half. But if you compare it to EM small cap funds, it's not really an outlier.

I have not and would not touch it in taxable, but as a long-term holding in tax-advantaged, I was willing to start shifting some of our sizable vanilla emerging market investments into EYLD. (We still own a fair amount of Vanguard's VEMAX and Fidelity's FPADX, the latter in my Fidelity HSA.)
For my international exposure I use:

Vanguard International Growth Fund Admiral Shares (VWILX)
iShares Edge MSCI Multifactor Intl Small-Cap ETF (ISCF)
Vanguard FTSE Emerging Markets ETF (VWO)

I don’t know yet how to open room for EYLD.

Cheers :greedy
The obvious answer would be to take it from VWO right? At what ever ratio works for you.

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hdas
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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by hdas » Mon Nov 18, 2019 7:43 am

fennewaldaj wrote:
Sun Nov 17, 2019 10:12 pm
hdas wrote:
Sat Nov 16, 2019 8:57 am
jhfenton wrote:
Fri Nov 15, 2019 3:18 pm
I gu
hdas wrote:
Thu Nov 14, 2019 8:12 am
I've done some research into active funds in emerging markets and didn't find anything compelling. This fund has done very well, who knows going forward.
I guess we're the only fans. :beer

As I said, I think the expense ratio should be cut in half. But if you compare it to EM small cap funds, it's not really an outlier.

I have not and would not touch it in taxable, but as a long-term holding in tax-advantaged, I was willing to start shifting some of our sizable vanilla emerging market investments into EYLD. (We still own a fair amount of Vanguard's VEMAX and Fidelity's FPADX, the latter in my Fidelity HSA.)
For my international exposure I use:

Vanguard International Growth Fund Admiral Shares (VWILX)
iShares Edge MSCI Multifactor Intl Small-Cap ETF (ISCF)
Vanguard FTSE Emerging Markets ETF (VWO)

I don’t know yet how to open room for EYLD.

Cheers :greedy
The obvious answer would be to take it from VWO right? At what ever ratio works for you.
VWO is in taxable and I have a nice LTCG. The alternative is to sell VWILX and split the proceeds in EYLD and ISCF. Cheers :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

guyinlaw
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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by guyinlaw » Mon Nov 18, 2019 8:17 am

AVEM seems to be performing well, since its inception in September.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by jhfenton » Mon Nov 18, 2019 4:09 pm

guyinlaw wrote:
Mon Nov 18, 2019 8:17 am
AVEM seems to be performing well, since its inception in September.
It would never occur to me to check 2-month performance.

I'm withholding judgment. The initial portfolio characteristics seem OK, modestly better on most measures than the standard MSCI or FTSE index portfolios. But overall, it seems pretty tame. They seem to have fairly strict sector and country constraints to minimize tracking error relative to the MSCI index. Even the claimed size tilt is fairly modest.

Do the modest improvements justify the 19-22 bp extra explicit expense you'd be paying compared to vanilla EM ETFs at 11-14 bp? I'm withholding judgment over the longer term, but at the moment, the answer is no.

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Re: Not a bad choice for your EM equity exposure (EYLD)

Post by ronno2018 » Mon Nov 18, 2019 4:13 pm

305pelusa wrote:
Sat Nov 16, 2019 1:05 am
ronno2018 wrote:
Fri Nov 15, 2019 11:58 pm
That is interesting. I am so sad about VWO. It is just sits there and does nothing at all.

In theory there should be awesome growth from emerging markets. Unfortunately I think there is just too much corruption and malfeasance, lack of good governance, stability, in all EM. Maybe you can make it work with some selectivity. I do not know.

I just know the people in Chile or wherever deserve better and cleaner government and markets. I hope it happens!
Lol "the people in Chile or wherever".
You do know that Chile is actually a fairly prosperous nation right? Hardworking, competitive, high income and growth. It runs a pretty clean government, with corruption as low as many first world countries. It's actually very close from achieving developed market status, will most likely do it within a few years.
Well I picked Chile because of all the recent protesting -- https://www.nytimes.com/2019/11/15/worl ... ution.html , making it somewhat emblematic of governance issues, but pick your poison -- Phillipines, etc. I did not intend to make anything other than a generic argument though based on my selection of a small amount of VWO 11 years ago.

I hope all the world's economies grow and we investors benefit. :sharebeer

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