Following the Trend: A Systematic Framework for Fixed Income Investing
How rule-based trend signals can be applied to bond portfolios without forecasting rates.
White Papers
BREAKING THE MARKET CAP LINK: The Case For A U.S. Equal Weight Approach
Market capitalization weighting is firmly entrenched in modern investing. But what if the mechanics of this widely accepted approach introduce inherent structural biases and underappreciated risks? Drawing on decades of U.S. equity data, this paper examines the core limitations of market cap weighting and explores a straightforward alternative, one that offers a more sensible, balanced approach to portfolio construction.
Can We All Invest Like Yale?
David Swensen is regarded as one of the greatest capital allocators of all time, if not the greatest. Before his passing in 2021, Swensen’s tenure at the Yale University endowment office was legendary. The endowment returned over 13% per annum, higher than any relevant benchmark, including the unstoppable US stock market, and with lower volatility, too. Does Yale have the magical formula, or is it possible for the public market investor to achieve anything near Swensen’s returns? Can any of us really invest like Yale?
Do You Pay Taxes? Then Avoid Dividends and Do this Instead
In this white paper, we question an investing strategy that’s so beloved, it borders on sacrosanct – dividend-investing. Yet if you love dividends, we encourage you to keep an open mind, for rejecting these ideas would only shortchange yourself. That’s because we believe the alternative approach we suggest you consider has the potential to increase your returns significantly. And that’s just the start, because we think it also carries benefits that could result in even greater improvements for taxable investors.
Introduction to the 351 ETF Exchange
Over the past few decades, investors have come to appreciate the ETF structure for numerous reasons—intraday liquidity, low fees, and tax efficiency. These features have led to investors voting with their dollars, and flows have been consistent from traditional high-fee, tax-inefficient vehicles into the ETF structure.
To borrow and alter a quote from Marc Andreessen, we believe that “ETFs are eating the asset management industry (in a good way!).”
However, while investors appreciate the ETF’s inherent tax efficiency, they often hold legacy stock positions with big capital gains. Selling their holdings and transitioning to an ETF would require a hefty tax bill.
Is it possible to transition their low-basis investments into the ETF structure tax-efficiently?
Section 351 ETF Conversion FAQs
Common questions and answers related to Section 351 ETF Conversions.
351 ETF Exchange – Things to Know
Qualifications, forms, and operational flow for working with Cambria on 351 ETF exchanges.
What if You Owned No US Stocks?
What is the single most universally held belief in all of investing?
Think about it for a minute.
Our vote would be “Investors MUST own US stocks.”
We believe there are many paths to building wealth. Relying on a concentrated bet in just one asset class in just one country can be extremely risky. While we often hear investors describe their investment in US market cap indexes as “boring,” historically, that experience has been anything but.
The Bear Market in Diversification
First, a warning.
If you’re an investor or, even worse, a financial advisor with a globally diversified portfolio, you may want to stop reading now. Continuing may just be too painful. Raise your hand if you muttered any of the following phrases to yourself. For the financial advisors out there, this list is probably just the beginning…
“Can you explain why we own foreign stocks? All they do is underperform. China is down 60%!”
“Why do we hold Gold? Ok, Boomer…”
“Everyone knew investing in bonds at 1% was a dumb idea, why didn’t you?”
“I read recently that GDP was going to accelerate to 50% a year due to AI. Can we sell all these underperforming
value funds and buy QQQ and NVDA?”
“This portfolio is much more volatile than my neighbor’s – he’s in private equity and real estate, and it moves
WAY less…”
I could go on, but it would just be cruel. You know all this because you lived through “The Bear Market in Diversification”.
T-Bills and Chill…Most of the Time
For the first time in a long time, fixed income investors have yield.
As of this writing in February 2024, short-term Treasuries yield over 5%, and long-term Treasuries around 4%.
Gone are the days of 0%, or even negative yielding bonds. (How weird was that?)
Retirees and fixed income investors are rejoicing, many acting like they just won the retirement lottery. For now, we’ll ignore the bond declines of 10%, 20%, or even 50% to get here.
Thus, the most popular financial phrase of 2023: let’s just “T-bills and Chill”.
Now that investors have reawakened to fixed income as an asset class; it opens the doors to all types of other bonds. Outside of US government bonds there are corporate bonds, junk bonds, mortgage backed bonds, TIPS, foreign bonds, and even Bowie Bonds.
How is an investor supposed to go about choosing between all of the various choices available?
