ETF Updates

I wanted to check in on the Cambria Endowment Style ETF (ENDW) which started trading in April. It's an actively managed fund that is "inspired by endowment style investment approaches, the fund is designed to pursue returns across various market conditions while maintaining an aggressive risk profile." It uses leverage.

The fund started as a 351 exchange which is a way to swap out a concentrated, taxable portfolio that has a low cost basis into a more diversified portfolio. To my understanding, it doesn't change the cost basis but it does derisk because the fund is more diversified than the concentrated portfolio. Now that it has been trading for awhile, anyone buying it today would being doing so because they believe ENDW is a good way to add an endowment modeled portfolio. 

I watched the holdings pretty regularly when it first started trading, I curious what Cambria's idea of endowment style would be. It seems like it took a while to get the portfolio fully implemented. It had a pretty large position in Nvidia (NVDA) for what seemed like a couple of months. 

The NVDA probably helped it outperform the other funds in the chart. I threw in NVDA because you can see some similarities between ENDW and NVDA that is far less prominent than the other funds allowing ENDW to outperform the others. If I am drawing the correct conclusion about the NVDA in ENDW, then it's NVDA boost may not be repeatable. 

Shortening the chart to three months and removing NVDA still looks good but it backed off some.

Quick pivot to the Invesco Equal Weight S&P 500 ETF (RSP) compared to the S&P 500.

The divergence is not a new story. In 2023, market cap weighting was up twice as much as equal weight and in 2024 the score was 22-10 favoring market cap weighting. This means the largest companies in the index are doing most of the lifting while the average stock is just muddling along. 

It's not that unusual over the course of stock market history but it's not an indication of health either. 

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