TAIL Profile
Cambria Tail Risk ETF is an actively managed exchange-traded fund focused on protecting investors from significant negative movements in the value of domestic equities. The fund's primary objective is to provide a hedge against severe market downturns by employing a strategic mix of cash, U.S. government bonds, and put options. This approach is designed to safeguard the portfolio from substantial losses during periods of market stress or extreme volatility.
To achieve its investment goals, the Cambria Tail Risk ETF maintains a portion of its assets in cash and high-quality U.S. government bonds, which offer safety and liquidity. The bulk of the fund’s strategy involves the use of put options, financial derivatives that increase in value as the underlying equity market declines. These options serve as a hedge against potential drops in the stock market, providing a buffer against sharp declines in equity values.
The fund’s investment adviser employs a systematic approach, allocating approximately one percent of the fund's total assets each month to purchase put options. This regular investment in put options helps manage the risk associated with significant market declines, ensuring that the fund remains well-positioned to offset losses during severe downturns. The use of put options is a proactive measure to protect the portfolio and preserve capital in challenging market conditions.
Managed by Cambria Investment Management, the ETF benefits from the firm's expertise in risk management and investment strategies. Cambria's disciplined approach combines traditional fixed-income investments with strategic derivatives to create a robust hedge against tail risk. The Cambria Tail Risk ETF offers investors a sophisticated tool for managing market risk, providing a safety net against extreme market movements while maintaining a portion of the portfolio in low-risk assets for stability and liquidity.
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