CRYP: 4th Quarter 2022 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/cryp.
The fourth quarter of 2022 was another challenging period for interest rate sensitive assets as Chairman Powell kept the heat turned up on rate hikes despite growing evidence of a broad-based economic slowdowns and deteriorating corporate profits. Equity markets rallied during the quarter, as the consensus shifted toward a Fed Pivot in the New Year, but even with a positive finish to the year for stocks, 2022 turned in the worst performance for the 60/40 portfolio in history. Digital assets struggled in Q4 as well as the triple whammy of rising rates, diminished liquidity and continued fallout from the FTX scandal weighed on the sector. Bitcoin shed (15%) during the quarter to complete a very disappointing year and investors found little solace in the fact that there were plenty of areas across markets that performed even less well.
The benefits of an actively managed strategy with a disciplined risk management framework was evident yet again in the fourth quarter as the AdvisorShares Managed Bitcoin Strategy ETF (CRYP) mitigated losses in the period, falling significantly less than the benchmark, down only -5.08%. The ability to tactically move between Bitcoin futures exposure and cash utilizing a proven trend following model added significant value during the quarter and for the period since the fund launched in April, 2022. We are pleased with how the fund was able to help investors manage through a very challenging market environment and how the fund achieved the objective of lowering the volatility inherent in this asset class. Volatility has been cited by many Advisors as a reason not to deploy assets into digital assets, and specifically Bitcoin, and we believe that this actively actively managed strategy meaningfully mitigates that risk, enabling Advisors to confidently include Bitcoin exposure in well-diversified portfolios.
|Ticker||Security||Portfolio Weight %|
|BITO||PROSHARES BITCOIN STRATEGY ETF||42.67%|
|BLACKROCK TREASURY TRUST INSTL 62||41.34%|
|BTF||VALKYRIE BITCOIN STRATEGY ETF||4.37%|
As of 12.31.2022. Subject to change.
Mark Yusko | Morgan Creek Capital, CEO and CIO
Portfolio Model Manager AdvisorShares Managed Bitcoin Strategy ETF (CRYP)
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. I
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.
There is no guarantee the fund will achieve its investment objective. This ETF may not be suitable for all investors. Bitcoin is a relatively new asset with a limited history. It is subject to unique and substantial risks, and historically has been a highly speculative asset and has experienced significant price volatility. While the Fund will not invest directly in bitcoin, the value of the Fund’s investments in Bitcoin Futures and Bitcoin ETFs is subject to fluctuations in the value of the bitcoin, which may be highly volatile. Investors may lose entire principal.
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. Because predictive models are usually constructed based on historical data supplied by third parties, the success of relying on such models may depend heavily on the accuracy and reliability of the supplied historical data.Through its investments in Bitcoin ETFs, the Fund is subject to the risks associated with their investments and structure as ETFs. The price and performance of bitcoin futures should be expected to differ from the current “spot” price of bitcoin. These differences could be significant. Bitcoin futures are subject to margin requirements, collateral requirements and other limits that may prevent the ETF from achieving its objective. Margin requirements for futures and costs associated with rolling (buying and selling) futures may have a negative impact on the fund’s performance and its ability to achieve its investment objective.Bitcoin is largely unregulated and bitcoin investments may be more susceptible to fraud and manipulation than more regulated investments.
As futures contracts approach expiration, they may be replaced by similar contracts that have a later expiration. This process is referred to as “rolling.” If the price of a long-term futures contract is greater than the short-term futures contract price, the market is considered to be in “contango.” If the price of a long-term futures contract is less than the short-term futures contract price, the market is considered to be in “backwardation.”