ACT: 3rd Quarter 2020 Portfolio Manager 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/act.

Commentary

The third quarter of 2020 was very strong month for AdvisorShares Vice ETF. The Fund gained 14.71% on its net asset value (NAV) and 14.65% on its market price during that period. The S&P 500 was up 8.93%. October has started off solidly in VICE’s favor as well.

Contributors / Detractors
The Fund’s largest holding Boston Beer (NYSE: SAM) is one that I talk about a lot, and it has been a top performer gaining over 64% for the 3-month period. Some restaurant and entertainment companies we hold for significant alcohol sales were also quite good. RCI Hospitality Holdings (NASDAQ: RICK) gained over 47%. BJ’s Restaurants Inc. (NASDAQ: BJRI) gained more than 40%, and Darden Restaurants Inc (NYSE: DRI) gained almost 33%.

On the negative side, a small holding in alcohol company Ambev SA ADR (NYSE: ABEV) lost more than 14%. U.K. tobacco companies, British American Tobacco ADR (NYSE: BTI) and Imperial Brands PLC (OTC: IMBBY) each lost more than 5% for the period.

For those concerned about stock market volatility or stock market unpredictability around the Presidential Election, I’d like to suggest investing in those things that citizens seem to spend money on no matter what’s happening with the economy or politics – I mean vices like drinking, smoking, gambling and gaming.

As already announced, after November 1, 2020, AdvisorShares Vice ETF will change it’s listing venue to the New York Stock Exchange and have a new ticker symbol, VICE. The principal investment strategy will change somewhat at the same time to add various forms of gambling, online gaming, esports, and even more food and beverage. 

Keep on eye on big things happening in VICE as we close out 2020!

Top Holdings

Ticker Security Description Portfolio Weight %
SAM BOSTON BEER COMPANY INC-A 10.54%
TMO THERMO FISHER SCIENTIFIC INC 8.27%
ABT ABBOTT LABORATORIES 5.11%
PKI PERKINELMER INC 5.03%
LVMUY LVMH MOET HENNESSY-UNSP ADR 4.82%
TPB TURNING POINT BRANDS INC 4.77%
NVS NOVARTIS AG-SPONSORED ADR 4.47%
ABBV ABBVIE INC 4.32%
SMG SCOTTS MIRACLE-GRO CO 4.16%
CTLT CATALENT INC 3.93%

As of 9.30.2020. Cash is excluded.

Please see our complete Fund holdings at advisorshares.com/etfs/act. The holdings details are updated each market day.

Cheers,

Dan Ahrens
AdvisorShares
AdvisorShares Vice ETF (ACT) Portfolio Manager

 

Past Manager Commentary

Definitions:

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.


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.

Investing involves risks including possible loss of principal. Cannabis-related companies are subject to various laws and regulations that may differ at the state/local and federal level. These laws and regulations may significantly affect a cannabis-related company’s ability to secure financing, impact the market for marijuana industry sales and services, and set limitations on marijuana use, production, transportation, and storage.  In addition to regulatory action, litigation initiated by private citizens or companies could have a negative impact on the financial and/or operational status of cannabis-related companies. Pronouncements from the current Administration suggest the Department of Justice (“DOJ”) may push back against states where marijuana use and possession is legal, step up the enforcement of federal marijuana laws and the prosecution of nonviolent federal drug crimes and, in the event the Rohrabacher-Farr amendment is not renewed by Congress, begin using federal funds to prevent states from implementing laws that authorize medical marijuana use, possession, distribution, and cultivation. Such actions by the DOJ could produce a chilling effect on the industry’s growth and discourage banks from expanding their services to cannabis-related companies where such services are currently limited.

Companies in the food, beverage and tobacco industry are very competitive and subject to a number of risks. Demographic and product trends, changing consumer preferences, nutritional and health-related concerns, competitive pricing, marketing campaigns, environmental factors, adverse changes in general economic conditions, government regulation, food inspection and processing control, consumer boycotts, risks of product tampering, product liability claims, and the availability and expense of liability insurance can affect the demand for, and success of, such companies’ products in the marketplace. For a full summary of the risks, please see the prospectus.

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 any time thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.