SURE: 2nd Quarter 2024 Portfolio Review
Portfolio Review
The US stock market extended its impressive gain in the second quarter of 2024, fueled by encouraging progress in falling inflation. This positive development has reignited investor optimism, with many betting on a potential interest rate cut by the Federal Reserve in September. Expectations are also rising that two rate cuts may even occur before the year end, providing further momentum to the market. The changing inflation outlook, together with several other critical factors, is likely to impact market performance and our investment strategy moving forward.
Source: Bureau of Labor Statistics. As of 6.30.2024.
One of the key drivers behind our strategy has been the continuation of robust stock buyback programs. The second quarter witnessed $380 billion in new stock buyback authorizations, marking the highest quarterly total in two years. These buybacks have provided a significant boost to the market, as companies repurchasing their own shares reduce the supply of stock, thereby increasing the value of remaining shares. This trend is expected to persist, offering a substantial tailwind for market performance in the coming months.
Source: Qubed Capital, LLC. As of 6.30.2024.
Meanwhile, as we enter the earnings season in July, there is a widespread expectation among investors that corporate earnings will surpass previous forecasts. The financial sector, in particular, is on track to achieve quadruple the expected earnings per share (EPS) growth. Overall revenue growth is also projected to exceed expectations, with corporate margins rebounding from their previous lows. These strong fundamentals are anticipated to come into sharper focus in the third quarter, bolstering investor confidence and market stability.
The technology sector, which has enjoyed a strong performance in Q2, faces high expectations as it moves into the latter half of the year. With valuations soaring, tech companies must deliver equally impressive financial results to justify their market positions. In our portfolio, the weight of the tech sector has increased steadily, now accounting for almost 20%. This is still significantly lower than the tech exposure in other major benchmarks, such as the S&P 500 Index, where tech represents nearly one-third of the total. Our diversified approach helps mitigate risks associated with sector concentration, offering a more balanced investment strategy.
Diversification remains a cornerstone of our investment philosophy, especially in the current market environment. By maintaining a diversified portfolio, we can alleviate concerns about overexposure to any single sector, including technology. This strategy not only reduces risk but also positions us to capitalize on growth across various industries. In a market where tech stocks dominate headlines, our broader exposure ensures we benefit from gains in other sectors that are also poised for growth.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| LRCX | LAM RESEARCH CORP | 1.19% |
| IDCC | INTERDIGITAL INC | 1.16% |
| AMKR | AMKOR TECHNOLOGY INC | 1.15% |
| LDOS | LEIDOS HOLDINGS INC | 1.13% |
| CTS | CTS CORP | 1.12% |
| MUSA | MURPHY USA INC | 1.11% |
| PJT | PJT PARTNERS INC – A | 1.11% |
| INTU | INTUIT INC | 1.10% |
| PRGS | PROGRESS SOFTWARE CORP | 1.10% |
| BDC | BELDEN INC | 1.09% |
As of 6.30.2024. 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 or summary 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.