DWAW: 4th Quarter 2020 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/dwaw.

Strategy

The AdvisorShares Dorsey Wright FSM All Cap World Equity ETF’s (DWAW) uses relative strength to allocate towards the strongest performing areas of Global Markets including size, style, broad market, and factor ETFs. The strategy implements Dorsey Wright’s proprietary Fund Scoring Method (FSM) which is built around relative strength and momentum. The top two scoring funds at each seasonal quarterly evaluation are selected as the holdings.  The strategy is not constrained to holding a set allocation to any sector, style, cap, or factor. This allows the portfolio to over or underweight markets to concentrate on areas of strength in the global market, often pushing the portfolio to vary dramatically from a standard broad market benchmark.

Performance & Holdings

For much of 2020 DWAW centered its portfolio around large cap growth, but at the beginning of November it made a full transition out of large growth and into mid and small growth. The latter part of 2020 saw a fairly large laggard rally which was a major tailwind for small caps in particular with growth still maintaining leadership over value. The exposure to small growth at the end of the year helped DWAW have a strong finish in the fourth quarter. For the 2020 year, DWAW returned 48.84% while its benchmark, the MSCI ACWI, returned 16.25%. In the fourth quarter of 2020, DWAW returned 19.86% beating its benchmark, MSCI ACWI, by 5.18%.

The portfolio continues to be allocated to securities that we believe to display favorable relative strength characteristics. The portfolio is made up of two ETFs, both of which have shown high relative strength versus the broad market. We continue to see Growth hold strength over Value across all cap sizes which is reflected in the holdings.

Top Holding(s)

Ticker Security Description Portfolio Weight %
JKK ISHARES MORNINGSTAR SMALL-CAP 51.16%
JKH ISHARES MORNINGSTAR MID-CAP 48.77%
  Cash 0.07%

Top 10 Underlying Stock Exposure

Ticker Security Description Portfolio Weight %
PLUG Plug Power Inc. 0.85%
CRWD CrowdStrike Holdings, Inc. Class A 0.74%
MTCH Match Group, Inc. 0.73%
CDNS Cadence Design Systems, Inc. 0.71%
MSCI MSCI Inc. Class A 0.69%
A Agilent Technologies, Inc. 0.67%
ROKU Roku, Inc. Class A 0.67%
DXCM DexCom, Inc. 0.66%
PANW Palo Alto Networks, Inc. 0.63%
VRSK Verisk Analytics Inc. 0.63%

As of 12.31.2020.

Geographic & Sector Allocations

The portfolio’s universe of funds to choose from includes domestic, emerging, and developed markets, but is currently allocated only to the domestic equity market.

As of 12.31.2020.

Given the overweighting of growth in DWAW, Information Technology has the largest sector exposure with 35.05%. Following behind Information Technology are Health Care and Industrials.  Sectors that have little to no exposure are Energy, Materials, Utilities, and Real Estate. The move out of large cap growth saw a shift away from Consumer Discretion and Communication Services to a larger weighting for Health Care and Industrials.  DWAW has no sector caps which allows it to fully take advantage of dispersion between different sectors. The overweighting of Information Technology and Industrials has been a tailwind for the fund and the avoidance of Energy and Real Estate has helped maximize the benefits of sector dispersion.

As of 12.31.2020.

Respectfully,

Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright FSM All Cap World ETF (DWAW) Portfolio Strategist

 

 


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.

Investing Involves risk including possible loss of principal. The Advisor’s judgment about the markets, the economy, or companies may not anticipate actual market movements, economic conditions or company performance, and these factors may affect the return on your investment. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Investments in emerging or offshore markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments. The market value of debt securities held by the Fund typically changes as interest rates change, as demand for the instruments changes, and as actual or perceived creditworthiness of an issuer changes.

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.