DWAW: 3rd Quarter 2023 Portfolio Review
Strategy
The AdvisorShares Dorsey Wright FSM All Cap World Equity ETF’s (DWAW) looks to rotate among a broad inventory of US and international equity representatives, seeking to hold the strongest two areas following each evaluation. The strategy utilizes the Dorsey Wright Fund Score Methodology (FSM), which incorporates multiple trend and relative strength characteristics to arrive at a concise technical score for each fund included in the strategy inventory. This inventory is ranked by fund score on set evaluation points for the strategy, which take place on off-calendar quarters to capture seasonality in the marketplace. They take place at the beginning of February, May, August, and November. The strategy then looks to hold the top two scoring funds at each evaluation. This strategy also has the potential to move defensively in times of intense market turbulence according to technical risk triggers. These triggers compare our technical ranking of the core US equity market and the technical ranking of cash and are evaluated monthly. This strategy is meant to act as a core portfolio allocation toward equities, giving the broader portfolio the ability to maintain exposure toward the strongest areas of global equity markets while avoiding the weakest areas.
Performance
The global equity market saw weakness in the third quarter of the year, leading to underperformance from DWAW as it returned -4.08% (market) for the last three months compared to the -3.81% return for the MSCI ACWI Index over the same timeframe (6/30/23 – 9/30/23). This underperformance was primarily the result of the portfolio’s exposure toward the iShares MSCI EAFE ETF (EFA), which was a holding until the last strategy evaluation at the beginning of August. The portfolio continues to underperform the benchmark on a year-to-date basis, as the turbulent nature of this year’s market environment has prohibited the development of long-term trends.
Holdings
The portfolio saw one trade during the third quarter, which occurred at the last evaluation at the beginning of August. At that evaluation, the strategy sold EFA and purchased the Invesco QQQ Trust (QQQ), which joined the First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW) as the two strategy holdings. This marks the third change in the portfolio so far this year. With this change, the portfolio shows a significant overweight toward the Information Technology sector, at over 40% of its allocation. The portfolio remains fully invested, as the risk-triggers continue to indicate an offensive posture toward the equity allocation.
Top Holding(s)
| Ticker | Security Description | Portfolio Weight % |
| QQQ | INVESCO QQQ TRUST SERIES 1 | 50.02% |
| QQEW | FIRST TRUST NASDQ 100 EQ WEI | 49.89% |
As of 09.30.2023. Cash not included.
As of 09.30.2023.
Respectfully,
Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright FSM All Cap World ETF (DWAW) Portfolio Model Manager
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.
