DWAW: 3rd 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.

Portfolio & Holdings

The second half of 2020 has sprung forward as one of the fastest rebounds in the market over the past few decades. We have continued to see the market dominated by growth rather than value. Of the ETFs DWAW can choose from, growth oriented ETFs continue to have the highest fund scores. The broad-based benchmark, the MSCI All Country World Index, was down 3.22% this month. The portfolio did not hold up as well as its benchmark this month as sectors overweight in the portfolio like Technology suffered from broad US market volatility. This is not a concern however as the strategy continues to have nearly a 25% lead ahead of its benchmark for the year.

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 %
QQQ INVESCO QQQ TRUST SERIES 1 50.50%
JKH ISHARES MORNINGSTAR MID-CAP 49.38%
  BLACKROCK TREASURY TRUST INSTL 62 0.15%

Top 10 Underlying Stock Exposure

Ticker Security Description Portfolio Weight %
AAPL Apple Inc. 6.72%
MSFT Microsoft Corporation 5.39%
AMZN Amazon.com, Inc. 5.35%
FB Facebook, Inc. Class A 2.13%
ZM Zoom Video Communications, Inc. Class A 1.78%
TSLA Tesla Inc 1.73%
GOOGL Alphabet Inc. Class A 1.71%
GOOG Alphabet Inc. Class C 1.66%
SQ Square, Inc. Class A 1.62%
MELI MercadoLibre, Inc. 1.58%

As of 9.30.2020.

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 9.30.2020.

Given the overweighting of growth in DWAW, Information Technology has the largest sector exposure with 45.83%. Following behind Information Technology are Consumer Discretionary, Health Care, and Communication Services.  Sectors that have little to no exposure are Energy, Materials, Utilities, and Financials. DWAW has no sector caps which allows it to fully take advantage of dispersion between different sectors. The overweighting of Information Technology has been a tailwind for the fund and the avoidance of Energy has helped maximize the benefits of sector dispersion. 

As of 9.30.2020.

Respectfully,

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

 

Past Commentary

Coming soon.

 


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.