AADR: 1st Quarter 2024 Portfolio Review

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized. For the fund’s most recent standardized and month-end performance, please click www.advisorshares.com/etfs/aadr.

Strategy

The AdvisorShares Dorsey Wright ADR ETF’s (AADR) strategy uses relative strength to allocate towards the strongest performing ADR’s in the Developed and Emerging Markets. The strategy starts with a top down approach, first ranking each sector based on its relative strength scores and then setting the weighting of each sector. Holdings are scored daily based on an in-house momentum score which compares each security to the peers in the universe. If a securities rank fall below our sell threshold, it is removed. The strategy is not constrained to holding a set allocation to Emerging or Developed Markets, rather the process identifies areas of strength across the globe regardless of geographical location. This allows the portfolio to over or underweight regions and markets to concentrate on areas of strength, often pushing the portfolio to vary dramatically from international benchmarks.

Performance

Momentum strategies performed well across the board in Q1 2024 with AADR outperforming the MSCI All World ex-US Index by over 5%.  The strategy has also done well over the last 12 months as it’s up 30% vs. 15% for the index.  The outperformance, once again, largely came from investments in Latin America (Argentina) and Western Europe where we have meaningful overweights that worked in our favor.  Latin America, as a region, didn’t perform well this quarter, but our allocation to outperformers like BMA and GGAL more than made up for any regional weakness.

Holdings

The portfolio continues to be allocated to securities we believe display favorable relative strength characteristics. At any given time, the portfolio will be comprised of 30-40 US traded ADR’s from our universe of 300-450 ADR’s. Currently, the portfolio consists of 37 securities with weights ranging from ~0.19% to ~6.56% with the top 10 holdings comprising roughly 38% of the portfolio.

​Top 10 Holdings

Ticker Security Description Portfolio Weight %
NVO NOVO-NORDISK A/S-SPONS ADR 6.56%
YPF YPF S.A.-SPONSORED ADR 4.31%
EDU NEW ORIENTAL EDUCATIO-SP ADR 3.98%
UBS UBS GROUP AG-REG 3.55%
BBVA BANCO BILBAO VIZCAYA-SP ADR 3.51%
MUFG MITSUBISHI UFJ FINL-SPON ADR 3.39%
ABBNY ABB LTD-SPON ADR 3.27%
CX CEMEX SAB-SPONS ADR PART CER 3.24%
BAESY BAE SYSTEMS PLC -SPON ADR 3.22%
ERJ EMBRAER SA-SPON ADR 3.21%

As of 3.31.2024. 

Geography

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 also looks different when comparing Developed Market vs. Emerging Market exposure.  The portfolio currently holds more Developed Market equities than Emerging Market equities (54% vs. 46%) as we’ve seen Developed Markets outperform over the last year.  The country allocations are also substantially different.  As can be seen below, AADR holds no exposure to Canada, Australia, and India and reduced exposure to Japan, UK, France, China, Germany, and Taiwan which are all large weights in the benchmark.  Instead, we have excess allocations to countries like Switzerland and Argentina where we’ve seen relative strength of late.  At times we’ll own many countries which would never have large allocations in a passive benchmark (Argentina is a current example).  Japan has been a top performer of late as well and we’ve seen our allocation swell there.  This has also allowed the portfolio keep up with the index as Japan is the highest allocation to most broad international indexes.


As of 3.31.2024.

Sector

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, and Industrials while most underweight in Communication Services, Real Estate, and Materials.


As of 3.31.2024.

John LewisRespectfully,

John G. Lewis
Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright ADR ETF (AADR) Portfolio Manager

 

Definitions:

An American Depositary Receipt (ADR) is a negotiable U.S. Security that generally represents a company’s publicly traded equity or debt. Depositary Receipts are created when a broker purchases a non-U.S. company’s shares on its home stock market and delivers the shares to the depositary’s local custodian bank, and then instructs the depositary bank to issue Depositary Receipts.

The MSCI All Country World Ex-U.S. Index (ACWI) is a free float adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.

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.

Contact Info

info@advisorshares.com
1.877.843.3831

Location

AdvisorShares Investments, LLC
4800 Montgomery Lane,
Suite 150
Bethesda, Maryland 20814

ETF Symbols

AADR, BEDZ, CWS, DWAW, DWSH, DWUS, EATZ, GK, HDGE, HVAC, MSOS, MSOX, PSIL, QPX, SURE, VEGA, VICE, YOLO

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