SURE: 4th Quarter 2023 Portfolio Review
Portfolio Review
2023 turned out to be a tumultuous, yet rewarding, year for the US equity market. The AdvisorShares Insider Advantage ETF (SURE) stood out in the investment landscape, finishing the year with a remarkable gain of 23.50% (market). SURE not only surpassed most of its competitors, but also demonstrated resilience in a period of economic uncertainty and market fluctuations. This resilient performance can be attributed to several key factors that SURE employed effectively throughout the year.
The popular stock buyback programs remained a unique opportunity for our fund. Despite a decrease from the all-time high record in 2022, US public companies still added a substantial $918 billion in stock buyback capacity in 2023. While this figure was lower than the $1.1 trillion peak of the previous year, it represented a significant opportunity for investors. SURE capitalized on this by investing in a diversified pool of stocks backed by robust buyback programs. These buybacks often signal a company’s confidence in its own financial health and future prospects, making them, in our opinion, attractive investment targets.
Source: Qubed Capital, LLC. As of December 31, 2023.
Secondly, our quantitative model played a pivotal role in SURE’s success. Accurately predicting the resilience of consumer spending, it allowed us to position SURE’s holdings strategically across various sectors. Notably, consumer discretionary was our largest sector investment in 2023, accounting for an average weight of around 19%. Within this sector, we focused on homebuilders, retailers, and hotel operators, who benefited immensely from the continued demand in the post-Covid era. Our targeted approach in these areas was validated by the strong performance of these industries, contributing significantly to SURE’s overall success.
Source: Bloomberg. From January 1 – December 31, 2023.
Lastly, the active management of SURE was instrumental in navigating the unpredictable market environment of 2023. Unlike passive funds, our active management approach enabled us to swiftly adjust our positions in response to evolving market information and trends. This agility proved vital in capitalizing on emerging opportunities and mitigating risks in a timely manner, thereby protecting and enhancing investor value for SURE shareholders.
Looking forward, the investment landscape remains shrouded in uncertainty. Key factors such as inflation trajectories and interest rate adjustments will continue to be focal points for investors. Although 2023 could be seen as a year of a soft landing for the economy, companies are understandably exercising caution amidst heightened geopolitical risks and uncertainties. Similarly, investors might consider adopting a cautious stance following the strong bull market of the previous year.
SURE’s strong performance in 2023 is a testament to its robust quantitative investment model and active management style. As we navigate the complexities of the current financial environment, we remain committed to identifying and exploiting market opportunities, always with an eye towards delivering sustainable performance for our investors.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| KBH | KB HOME | 1.20% |
| MLI | MUELLER INDUSTRIES INC | 1.14% |
| MATX | MATSON INC | 1.14% |
| UFPI | UFP INDUSTRIES INC | 1.13% |
| PHM | PULTEGROUP INC | 1.12% |
| HLT | HILTON WORLDWIDE HOLDINGS IN | 1.11% |
| MTG | MGIC INVESTMENT CORP | 1.11% |
| HRB | H&R BLOCK INC | 1.11% |
| KLAC | KLA CORP | 1.11% |
| LRCX | LAM RESEARCH CORP | 1.10% |
As of 12.31.2023. Subject to change.
Respectfully,
Minyi Chen
Qubed Capital, LLC
AdvisorShares Insider Advantage ETF (SURE) Portfolio Strategist
Past Commentary
– A buyback (or repurchase) occurs when a company repurchases its own shares from the marketplace, reducing the number of shares outstanding.
– An insider is an officer, director, executive, entity, or individual that owns more than 10% of a publicly traded company’s shares.
– Insider buying is the legal purchase of shares in a firm by a corporate insider that is not based on non-public, material information and follows the U.S. Securities and Exchange Commission’s rules and reporting requirements.
– The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks. One cannot invest directly in an index.
*On September 1, 2022, the AdvisorShares DoubleLine Value Equity ETF (the “Predecessor Fund”) was renamed the AdvisorShares Insider Advantage ETF. The Predecessor Fund had different portfolio managers and investment strategy than the AdvisorShares Insider Advantage ETF. Performance prior to September 1, 2022 reflects the Fund’s performance prior to the change in manager and investment strategy and may not be indicative of the Fund’s performance under the new manager and revised investment strategy. Performance since September 1, 2022 reflects actual AdvisorShares Insider Advantage ETF performance.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting the Fund’s website at www.AdvisorShares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, Distributor.
The Fund’s investment focus follows a core philosophy that corporate insiders know their companies best. The Advisor believes that insider buying and stock buyback programs not only show that corporate insiders see relative value in investing in their own company’s equity securities, but also create favorable market conditions by reducing public equity float (i.e., the share supply available to investors on the public secondary market). The Advisor allocates the Fund’s portfolio using research from a disciplined and quantitative proprietary model, the U.S. Insiders Edge Model, developed by Qubed Capital, LLC. In utilizing the model, the Advisor seeks to remove emotion from day-to-day decision-making by following a systematic process.
The Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by primarily investing in a portfolio of U.S. traded companies selected from a universe of the largest 3,000 U.S. equity securities based on market capitalization. When models and data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. In addition, the use of predictive models has inherent risk.
The views in this commentary are those of the portfolio manager/strategist and may not reflect his views on the date this material is distributed or anytime thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.