AADR: 4th Quarter 2022 Portfolio Review
Fourth quarter 2022 performance was great for International Equities as the MSCI All World ex-US Index gained +14.66%. Unfortunately, AADR lagged as it only gained +9.69%. Most of the underperformance came from being underexposed to European equities. With fears relating to the war in Ukraine and the associated energy crisis starting to subside, European equities had an incredible rally (+20.47%) during the quarter. Also, since most of Europe is developed, the benchmark had a higher allocation here throughout the quarter.
The portfolio continues to be allocated to securities that we believe display favorable relative strength characteristics. At any given time, the portfolio will be comprised of 30-40 U.S.-traded ADR’s from our universe of 300-450 ADR’s. Currently, the portfolio consists of 38 securities with weights ranging from ~1.9% to ~4.7% with the top 10 holdings comprising roughly 36% of the portfolio. Tenaris SA was the best performing stock for the quarter (+37.47), while Telkom Indonesia was the worst performing stock (-18.82%).
Top 10 Holdings
|Ticker||Security Description||Portfolio Weight %|
|NVO||NOVO-NORDISK A/S-SPONS ADR||4.63%|
|IBN||ICICI BANK LTD-SPON ADR||4.16%|
|TTM||TATA MOTORS LTD-SPON ADR||3.49%|
|EQNR||EQUINOR ASA-SPON ADR||3.48%|
|DEO||DIAGEO PLC-SPONSORED ADR||3.18%|
|GMAB||GENMAB A/S -SP ADR||3.18%|
|MUFG||MITSUBISHI UFJ FINL-SPON ADR||3.05%|
|UBS||UBS GROUP AG-REG||3.02%|
|ABB||ABB LTD-SPON ADR||2.90%|
As of 12.312022.
The portfolio’s process of focusing on sectors and the strength of holdings allows the portfolio to look much different than the broad market benchmark. The current allocation though is much closer to the benchmark’s allocation when comparing Developed vs. Emerging Market Exposure. This is largely due to the positive relative performance of Developed Markets over the last year as mentioned before as the strategy seeks to rotate into strength. This has started to change though as the relative strength of Emerging Markets has begun to pick up a bit. The portfolio currently stands at 52% Developed vs. 48% Emerging. The country allocations, though, are substantially different. As can be seen below, AADR holds no exposure to Canada, France, Germany, Australia, and Taiwan which are all substantial weights in the benchmark. Instead, we have excess allocations to countries like the United Kingdom and India. At times we’ll own many countries which would never have large allocations in a passive benchmark.
As of 12.31.2022.
The buy/sell process of the strategy starts with a look at the strongest sectors within the universe, overweighting strength and underweighting or eliminating relative weakness. The portfolio continues to be actively allocated to sectors in a materially different way than the benchmark. Notably, the portfolio is most overweight in Energy, Financials, Health Care, and Consumer Staples while most underweight in Information Technology, Materials, Consumer Discretionary, and Real Estate.
As of 12.31.2022.
John G. Lewis
Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright ADR ETF (AADR) Portfolio Manager
Past Manager Commentary
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 www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor. There is no guarantee that the Fund will achieve its investment objective. An investment in the Fund is subject to risk, including the possible loss of principal amount invested. Emerging Markets, which consist of countries or markets with low to middle income economics can be subject to greater social, economic, regulatory and political uncertainties and can be extremely volatile. Other Fund risks include concentration risk, foreign securities and currency risk, ADRs which may be less liquid, large-cap risk, early closing risk, counterparty risk and trading risk, which can increase Fund expenses and may decrease Fund performance. The Fund is, also, subject to the same risks associated with the underlying ETFs, which can result in higher volatility. This Fund may not be suitable for all investors. See prospectus for detail regarding risk. Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times. Holdings and allocations are subject to risks and to change. The views in this commentary are those of the portfolio manager 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.