In short: Historical — the one fund Cambria actually closed, and he explains why: the intended buyer didn't exist. "Almost no US investors own foreign stocks," and those who do "think they're screaming cheap because they've gone nowhere for 15, 20 years and they don't want to hedge them"; anyone wanting to hedge foreign beta just shorts more-expensive US beta instead. He states the general policy for context — funds are not closed for small assets or a bad five years, only when the reason is structural.
FAIL was the foreign-stock version of TAIL — insurance against a crash in international equities — and it is the one fund Cambria actually shut down. The story is a useful lesson in product-market fit rather than a live idea. Cambria originally planned four tail-risk funds covering US stocks, foreign stocks, long-dated bonds and corporate/junk debt; the bond one was overtaken by events when rates went from zero to five, and the corporate/junk one may still launch when credit spreads are thin enough to be worth insuring against.
FAIL died because its buyer didn't exist. Almost no American investors own foreign stocks in the first place; those who do consider them already cheap after fifteen or twenty flat years and see no reason to hedge; and anyone who does want to hedge international exposure tends to short the more expensive US market instead. Faber notes for context that Cambria's policy is never to close a fund for small assets or a bad five-year stretch — only when the reason is structural, as here.
24:07Second is to the extent they do hold them, they think they're screaming cheap because they've gone nowhere for 15, 20 years and they don't want to hedge them. So, that is not something that's probably going to reconcile anytime soon. I mean, these markets need to go up, some of them 50% before even they're like normal valuation.
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