Cambria Value and Momentum ETF (VAMO) seeks to track an index that combines value and momentum investing strategies across global equity markets. The underlying index selects undervalued stocks trading below intrinsic value estimates while exhibiting positive price momentum trends over multiple time periods.
How It Works
VAMO employs a quantitative, rules-based approach that screens global stocks using proprietary value metrics including price-to-book, enterprise value ratios, and earnings quality measures. Selected value stocks must also demonstrate positive momentum signals across 1, 3, 6, and 12-month periods. The fund rebalances quarterly and typically holds 50-100 positions with equal weighting to avoid market-cap concentration bias found in traditional indices.
Key Features
- Combines contrarian value investing with momentum signals, potentially capturing mean reversion while avoiding value traps
- Global diversification across developed and emerging markets provides broader opportunity set than U.S.-only value funds
- Equal-weighted methodology prevents over-concentration in mega-cap stocks that dominate market-cap weighted value indices
Risks
- This ETF can lose value when value stocks underperform growth stocks for extended periods, as occurred 2010-2020 when growth dominated
- Momentum signals can reverse quickly during market volatility, causing whipsaw effects that hurt performance in choppy markets
- Global exposure adds currency risk and emerging market volatility that could amplify losses during international crises or dollar strength
Who Should Own This
Best suited for tactical allocation (5-15% of equity portfolio) by intermediate investors with 3-7 year time horizons seeking factor diversification. Requires medium-to-high risk tolerance due to value investing's cyclical nature and momentum strategy volatility. Works as satellite holding for investors wanting alternatives to traditional growth-heavy market-cap weighted indices.