July 1, 2018
By Exponential ETFs

There’s an order to things, a way they go. In the asset management space, an angel investment can get a new company started, after which venture capital is infused at different rounds, typically following sales targets being achieved. The venture capital is plugged into the distribution network so that the asset growth can scale up by doing more of what is already working, just with more salespeople. Do that well for a few more years and then the investment bankers come in and arrange a sale or an IPO. Champagne and options payouts ensue, followed by the good life of board seats and thrice-a-week golfing. That is the well-worn blueprint.

Meb Faber does it his own way.

It happened so fast, you probably missed it. I almost did. A quick tweet by Meb Faber, co-founder and CIO of Cambria Investments, linking to a short blog post that read as follows:

As the majority of you are aware, we lost our co-founder, and dear friend, Eric this past January. However, after discussing it as a team, we decided to continue on with the mission Eric helped start, of growing Cambria into a world-class asset management shop. We believe this is what he would have wanted and is an appropriate way to honor him.

Eric owned a substantial portion of equity in Cambria, and while we believe friends and family would happily purchase Eric’s former share, we’re also aware that an investment by the right institutional buyer might turn out to be a wonderful partnership for both firms.


To that end, if you represent an institution that would be interested in learning more about owning a substantial portion of Cambria’s equity via Eric’s former ownership, please email me. I’d be happy to share more details with you and discuss whether this investment makes sense for all parties.


Thanks for your interest, Meb

It is often said of ETFs that they “democratize” investments. ETFs can be accessed by anyone, and allow fund companies to provide institutional quality products at institutional prices to every day investors. However, over the last few years, things have been moving in the opposite direction.

Wirehouses are implementing levels of due diligence that ensure that only the best products can be sold unsolicited within their doors, and no one can argue that that is not a prudent approach to take given the proliferation of new products available in the market. But an unintended consequence is that the democratic nature of open access is now bottle-necked by wirehouse gatekeepers.

Meanwhile, the last few years have seen the country’s largest investment banks, mutual fund issuers and insurance companies aggressively enter the ETF space in unison, flush with marketing budgets and recruiting specialists out to hire any ETF salesperson with a pedigree and a pulse, and a determination to compensate for their lack of foresight with a willingness to operate at loss if it means elbowing themselves a little bit of ETF market share.

Democratization of investments? Only in the most cynical sense of money-in-politics does this ring true in ETFs.

Cambria Investments doesn’t have traditional salespeople. Cambria has a direct, disintermediated approach: interested parties can find their funds through the white papers they produce, through their industry leading podcast, through their allocation models available directly through Betterment, through their accessible team, and through Meb Faber’s books.

And Cambria will suffer no intermediaries for their book distribution, even.

Cambria Investments recently ran a capital raise through a crowdfunding website, bringing in $3 million. I am fairly sure that this was the first time an established asset management company raised capital through this venue. A crowdfunding website can be called an intermediary, technically, but this was still a game changing move that went way outside the lines of what had been done. It took guts, it forced transparency, and it worked.

Now, by tapping into their network and offering equity in their business direct to interested parties, the disintermediation of Cambria’s liquidity and capital raising activities is being taken to a new level. This is groundbreaking stuff in the asset management space, and the first true fulfillment of ETFs “democratizing investments”.

Posted by: Phil Bak 07/01/2018

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