Cambiar debuts value-focused active equity ETF

Feb 21st, 2023 | By | Category: Equities

Cambiar Investors has debuted its first ETF, an actively managed global equity fund providing exposure to a concentrated portfolio of value stocks that represent the firm’s best ideas.

Brian Barish, President and CIO at Cambiar Investors

Brian Barish, President and CIO at Cambiar Investors.

The Cambiar Aggressive Value ETF (CAMX US) has been listed on NYSE Arca with an expense ratio of 0.59%.

The ETF has been created by converting one of Cambiar’s mutual funds – the Cambiar Aggressive Value Fund – which housed $50 million in assets.

Like its predecessor, the Cambiar Aggressive Value ETF will seek to outperform the benchmark Russell 1000 Value Index by focusing on just 20 to 30 high-conviction stocks, resulting in a high active share portfolio that aims to provide strong absolute returns over the market cycle.

While the ETF is expected to focus on US large-cap stocks, the fund has the flexibility to invest across the market cap spectrum as well as pursue opportunities in markets outside of the US.

Cambiar’s investment process contains three distinct steps: Quality, Price, and Discipline (QPD).

The first step involves seeking out quality companies that are considered to be industry leaders and exhibit favourable characteristics with regard to management’s track record, consistent profit margins, return on invested capital, low leverage, and high free cash flow.

Cambiar then utilizes a variety of traditional valuation metrics to determine which securities are perceived to be priced cheaply. Extra emphasis will be given to companies that have been identified as possessing a potential value-creation catalyst that the market appears to have mispriced. Examples of such catalysts include product introductions, managerial changes, divestiture of an underperforming division, or simply better financial performance.

Finally, Cambiar assesses each security’s upside potential. Companies entering the portfolio should possess an attractive total return potential that includes both price appreciation and dividends (if applicable) over a forward one to two-year timeframe.

Brian Barish, President and CIO at Cambiar Investors, commented: “The American stock market has been a standout for more than a decade and is among the most exciting places to practice our proven Quality, Price, and Discipline (QPD) approach to value investing. We believe the combination of increased tax efficiency and lower expenses, in conjunction with Cambiar’s longstanding price-sensitive investment discipline, results in an attractive proposition for investors looking to get greater exposure to high-quality value businesses.”

Commenting on how US value stocks have recently outperformed growth stocks for the first time in over a decade, Barish added: “With the higher cost of capital and the performance woes of many long-duration growth stocks, we are seeing a great deal of interest in value. For investors who believe there may be a shift in market leadership underway, we would position CAMX as an exciting satellite complement to any allocation model. A ‘best ideas’ value sleeve has the potential to deliver the kind of performance profile investors have come to only associate with riskier growth and speculative areas of the market.”

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