Gyroscopic Investing

Just thought to spread the news: Cambria Global Tactical ETF (GTAA) started trading today. It appears that GTAA is an "ETF of ETFs".

It will be interesting to see how it performs over the long term compared to a DIY 200-day SMA approach using 5 low-cost index ETFs. It remains to be seen what kind of crystal ball Mebane Faber can add to his strategy to justify the higher ER in the ETF.

It's now holding 40 ETFs! From: http://advisorshares.com/fund/gtaa

Holdings As of: 10/25/2010
Ticker Name                                 Weight
VWO VANGUARD EMERGING MARKETS ETF 5.03%
SCZ ISHARES MSCI EAFE SMALL CAP INDEX 5.00%
RWX SPDR DOW JONES INTERNATIONAL R 4.99%
TLT ISHARES BARCLAYS 20+ YEAR TREASURY BOND FUND 4.99%
IYR ISHARES DOW JONES US REAL ESTATE INDEX FUND 4.99%
RWR SPDR DOW JONES REIT ETF                 4.99%
VB VANGUARD SMALL CAP ETF                 4.01%
IWC ISHARES RUSSELL MICROCAP INDEX 4.00%
VO VANGUARD MID-CAP ETF                 4.00%
TIP ISHARES LEHMAN TREASURY INFLAT 3.99%
SHY ISHARES BARCLAYS 1-3 YEAR TR         3.32%
BIL SPDR BARCLAYS CAPITAL 1-3 MONTH T-BILL ETF 3.32%
BSV VANGUARD SHORT-TERM BOND ETF 3.32%
DBP POWERSHARES DB PRECIOUS METALS 3.02%
DBA POWERSHARES DB AGRICULTURE FUN 3.02%
DBB POWERSHARES DB BASE METALS FUN 3.02%
EWX SPDR S&P EMERGING SMALL CAP ET 2.52%
VEU VANGUARD FTSE ALL-WORLD EX-US ETF 2.50%
LSC ELEMENTS LINKED TO THE S&P COM 2.01%
QQQQ POWERSHARES QQQ                 2.00%
DBE POWERSHARES DB ENERGY FUND          2.00%
VTI VANGUARD TOTAL STOCK MARKET ET 2.00%
BWX SPDR BARCLAYS CAPITAL INTL D         1.99%
AGG ISHARES BARCLAYS AGGREGATE         1.99%
IEF ISHARES BARCLAYS 7-10 YEAR         1.99%
FXC CURRENCYSHARES CANADIAN DOLLAR 1.25%
FXA CURRENCYSHARES AUSTRALIAN DOLL 1.25%
FXY CURRENCYSHARES JAPANESE YEN TRUST 1.25%
FXE CURRENCYSHARES EURO TRUST         1.24%
PLW POWERSHARES 1-30 LADDERED TREA 1.04%
FXF CURRENCYSHARES SWISS FRANC TRU 1.00%
DBC POWERSHARES DB COMMODITY IND 1.00%
CEW WISDOMTREE DREYFUS EMERGING CU 1.00%
BZF WISDOMTREE DREYFUS BRAZILIAN R <1%
FXB CURRENCYSHARES BRITISH POUND STERLING TRUST <1%
HYG ISHARES IBOXX $ HIGH YIELD COR         <1%
CYB WISDOMTREE DREYFUS CHINESE YUA <1%
LQD ISHARES IBOXX INV GR CORP BD         <1%
MUB ISHARES S&P NATIONAL MUNICIPAL <1%
MBB ISHARES BARCLAYS MBS BOND FD           <1%

The expense ratio of this fund of funds, coupled with the intrinsic expense ratios of its constituent funds is pushing 2%. Asking this fund to beat the permanent portfolio by ~2% over time would be a tall order for it, or any fund.

jmourik wrote: It's now holding 40 ETFs! From: http://advisorshares.com/fund/gtaa

With that many ETFs it's basically a closet market index fund with high fees. How exactly does holding, for instance, 1.25% in Japanese Yen benefit an investor?

I wasn't able to post it, but go to Yahoo finance, look at a 5 day chart for GTAA, and check the little box that overlays the S&P 500.  It's almost identical.  I think with such a huge basket of funds, and with S&P 500 having so much international exposure anyway, you're better off in a low fee index.

With GTAA, wouldn't you be getting charged double management fees?  Fees on the underlying ETFs as well as fees for active management from GTAA itself?