CWS: 1st Quarter 2021 Portfolio Review

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Portfolio Review

The first quarter of 2021 was an important turning point for the stock market. It marked one year since the Covid pandemic broke out which has altered daily life across the globe. We also saw a new president inaugurated in Washington, DC.

For the stock market, we saw a key shift towards economic bullishness. On January 1, Wall Street was rather dour on its prospects for economic growth in 2021. But by April, the mood on Wall Street was decidedly more optimistic. There are a few important reasons for this.

For one, the Federal Reserve made it unambiguously clear that it will do whatever it requires to get the U.S. economy up and running. While this has led to an uptick in fears of inflation, so far, broad-based inflation hasn’t reappeared. The Federal Reserve plans to keep interest rates near zero. The central bank is also buying huge amounts of Treasury bonds and mortgage-backed securities. Fed Chairman Jerome Powell recently said that he expects to see very strong growth during the second half of this year.

The economy is also being helped by major fiscal stimulus efforts from the Biden administration. The president recently signed a $1.9 trillion economic aid plan. This has led to sharp increases in consumer spending and retail sales.

The major benefit for investors is that this has been a good time to in the market. While many companies are struggling in a difficult environment, we’re seeing the stocks in the AdvisorShares Focused Equity ETF (CWS) grow and thrive.

I’ll give you a few examples. During the Q4 earnings season, which ran from mid-January until mid-February, several of the companies we own reported very encouraging results. Wall Street has been expecting Disney (DIS) to report a loss of 42 cents per share. Instead, Disney reported a profit of 32 cents per share. The company’s streaming service has been a big hit.

When Disney+ was launched in November 2019, the company’s goal was to reach 60 million to 90 million subscribers by the end of fiscal 2024. Instead, Disney hit 100 million in March 2021. Contrast that with Netflix which took 10 years to hit 100 million.

Another company is our portfolio that’s done well for us has been Sherwin-Williams (SHW). In January, the paint people reported Q4 earnings of $5.09 per share. That easily beat Wall Street consensus of $4.85 per share. Sherwin also rewarded investors with a 3-for-1 stock split. In fact, the shares continued to rally after the stock split and recently touched a new all-time high.

Stryker (SYK) beat its Q4 earnings estimate by more than 10%. So did Silgan (SLGN). In fact, Silgan also helped investors by raising its dividend by 17%. This was the company’s 17th annual dividend increase in a row.

I’m pleased to say that for the first three months of this year, the traded shares of the AdvisorShares Focused Equity ETF (CWS) gained 2.17%, and the Net Asset Value (NAV) gained 2.54%. The ETF recently hit new all-time highs. The fund will celebrate its fifth birthday later this year.

What to expect for the rest of this year? So far, the major trends are pointing in the right direction. After a slow start, the vaccine rollout is gaining steam. Every day, millions of Americans are getting vaxxed. We’ve also seen major drops in the number of people getting Covid and the death rate has plunged significantly lower.

This will lead more people to go back to the malls and back to the office. Life, of course, won’t be exactly the same, but economy will thrive again. I don’t expect to see any major changes in Fed policy. The only possible trouble spot I see is a possible resurgence of inflation. I wouldn’t say it’s likely, but it’s something to watch out for. Overall, this is an excellent environment to be invested in the AdvisorShares Focused Equity ETF.

Top Holdings

Ticker Security Description Portfolio Weight %

As of 03.31.2021.

Management Fee

In a first for the ETF industry, the portfolio strategist of CWS has “skin in the game.” The strategist’s compensation is directly tied to portfolio’s performance. Using the trailing 12-month returns of CWS vs. its S&P 500 Index benchmark, stronger outperformance is rewarded with a larger management fee while weaker underperformance is penalized with a smaller management fee. The CWS fulcrum fee was 0.65% during March 2021. After the Fund’s March  performance, the CWS fulcrum fee will remain at 0.65% in April 2021.



Eddy Elfenbein
Crossing Wall Street
AdvisorShares Focused Equity ETF (CWS) Portfolio Strategist



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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.