Cambria Investment Management has set out to disrupt the increasingly crowded cannabis ETF space with the launch of a fund that is significantly cheaper than its rivals.
Meb Faber, co-Founder and CIO, Cambria Investment Management.
The Cambria Cannabis ETF (TOKE US) has listed on Cboe BZX Exchange and comes with a net expense ratio of just 0.42%.
The low price tag is, in part, due to a contractual fee waiver in place for a period of at least one year. That said, the fund’s gross expense ratio is 0.59% which is still 11 basis points cheaper than its closest competitor.
The ETF is expected to invest in a global portfolio of 20 to 50 securities from across the market cap spectrum that have operations linked to the cannabis industry.
While the fund is actively managed, it is guided by a series of rules which Cambria believes helps focus the portfolio on the cannabis theme.
Meb Faber, co-Founder and CIO, Cambria Investment Management, commented, “We founded Cambria on our deep belief in rules-based investing, which we believe can yield better long-term results for our clients. TOKE is our first thematic ETF which we believe has the potential to be a long-term growth story characterized by structural and behavioral inefficiencies.”
According to the fund’s prospectus, eligible firms include those that produce or support the production of cannabis such as certain agribusiness, biotechnology, life sciences, pharmaceutical, retail, finance, and real estate companies. The fund also invests in companies performing lawful research into the medical and pharmaceutical applications of marijuana as well as companies producing goods and equipment related to the cannabis industry.
Firms must derive at least 50% of their revenue from cannabis or hemp operations to be eligible for selection.
At least a quarter of the portfolio will be invested in Canadian marijuana firms; however, unlike many other cannabis ETFs which focus exclusively on North American-listed stocks, the Cambria fund will invest a significant portion of its assets in firms from Australia, Europe, and Asia.
US-listed companies making their way into the portfolio must operate legally at both the state and federal level.
Cambria now offers 12 ETFs, collectively housing over $1 billion in assets under management and spanning tactical, core, and value strategies.
Faber added, “The fund management industry is dominated by a handful of firms with massive sales and distribution, but we believe investors are looking for original, authentic investment solutions. Our firm’s growth to date is a testament to the trust of our over 30,000 investors who support us, our ideas, and our research. We’ve approached asset management a bit differently and we’re excited to continue launching innovative solutions investors care about.”