Rather than replicating the performance of a specific stock index, the Cambria Chesapeake Pure Trend ETF uses a strategy built on market-by-market trend signals. It tracks the movements of currencies, commodities, bonds and equities, and builds both long and short exposure across global markets in pursuit of capital preservation and long-term capital growth.

It suits long-term investors who feel that portfolios made up only of equities and bonds fall short, and who can accept both the diversification benefits that come from shifts in market direction and a high level of volatility.

This is an actively managed ETF run by Cambria.

Based on quantitative trend signals, the fund evaluates the direction of several macro asset classes. It participates in strong trends and can use defensive or short exposure when trends are weak. As a result, performance is affected not only by the equity market but also by interest rates, currencies, the commodity environment and the results of derivatives management.

• Systematic trend following that uses a variety of macro asset classes
• Both long and short exposure reflected in portfolio management

Assets under management (AUM) stand at $72.3M, and the total expense ratio (Expense Ratio) is 0.89% per year.

Unlike simple index-tracking products, an actively managed strategy with a managed-futures character can see its exposure change as signals change. It is therefore appropriate to interpret trading conditions and fee levels together with the strategy structure, use of derivatives and track record.

Returns are sensitive less to the direction of the equity market alone than to how long trends persist across currency, commodity, bond and equity markets. In an environment where a clear direction continues, the strategy's characteristics can show through, but when frequent reversals and sideways movement repeat, signal-switching costs and the potential for losses can grow.

When looking at fund flows, rather than judging by short-term performance alone, investors should also consider demand for managed futures and alternative strategies, the volatility environment and their own understanding of derivatives management. For a product with a limited track record, it is necessary to keep monitoring changes in trading conditions and asset size.

Multi-asset trend following and two-way access set it apart, but investors must accept the complex volatility created by derivatives and trend reversals.

The CGBL ETF, IALT ETF and ALLW ETF shown in the table can serve as starting points for comparison because they use asset allocation or alternative strategies, but their issuers, strategy structures, fee levels and asset sizes all differ. The CTA ETF can be compared on its managed-futures character, and the DRSK ETF from the perspective of defined risk management. Differences in fees and asset size in the table should be interpreted together with differences in management style and trading conditions. Because comparable listed fund data is limited, it is more appropriate to check each product's prospectus and exposure method individually than to assert a direct substitute.

When deciding whether to buy the MFUT ETF, investors should check trend signals, use of derivatives, trading conditions and distribution policy together, rather than applying only the same criteria used for equity products. In particular, it is important to first distinguish whether the purpose of a long-term holding is to track market returns or to diversify away from other assets.

With trend-following strategies, the experience can differ greatly depending on whether a direction persists or reverses sharply. Because commodity, interest rate, currency and equity market variables overlap with the characteristics of derivatives, investors should not judge the risk level by short-term performance alone and should also review the potential for losses and trading conditions.

The MFUT ETF is an actively managed product that uses trends across global macro asset classes to provide exposure that differs from traditional equity holdings. It can be a candidate for investors seeking a diversifier that responds to shifts in market direction, but they should decide in line with their purpose for holding it and their risk tolerance, after taking into account the lack of distribution history, derivatives risk and the need to understand the strategy.