DWEQ: 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/dweq.
Nasdaq Dorsey Wright has been a trusted partner for advisors since the 1980’s when the original team faxed Point and Figure charts from a small office in Richmond, Virginia. In the 90’s we began to implement our research into managed portfolios, later we introduced Mutual Funds, structured products and ETF’s. All of our strategies are based on simple idea, buy the winners and let them run. We systematically manage all of our portfolios to a set of rules that allows us to be objective and remove the emotion. It does not matter how a particular analysts feels about a stock (positive or negative), we follow our strict buy and sell process. This has, in our opinion been a hallmark of our success across a variety of asset classes.
For the AdvisorShares Dorsey Wright Alpha Equal Weight ETF (DWEQ), we continue to deploy investment ideas that have shown value over time. The first idea is that sectors showing strong momentum will often outpace the broad market and the sectors that show less favorable momentum. This is achieved through overweighting to strong companies to capture upward momentum, as well as removing or reducing allocations to trouble areas. Prime examples are reducing or removing energy exposure during the oil sell off of 2015 or overweighting technology over the past decade. The second idea is that being overly diversified dilutes momentum returns by forcing the portfolio to own names that are not as strong. This is implemented by reducing the total number of portfolio holdings to a manageable number.
Combining both of these ideas gives us a portfolio of names that are equally weighted in the three sectors that are showing the strongest momentum. The roughly 50 names in the portfolio are equally weighted and are rebalanced every time the portfolio makes a change. This pushes the portfolio to hold the top names in each sector.
Portfolio & Holdings
U.S. Markets posted an impressive third quarter, with large cap in the S&P 500 returning over 8% even in the face of a September sell off. Momentum proved to be resilient factor this month as the leaders outpaced the broad markets on both the upside of July and August as well as the downside of September. Overall the portfolios focus on the top sectors was a strong contributor to the portfolio this month. Consumer Discretionary was the best performing sector this quarter and the largest contributor of performance. Across the board the portfolios sector allocations where additive, even Healthcare which was removed early in the quarter provided positive attribution to the portfolio
|Ticker||Security Description||Portfolio Weight %|
|Z||ZILLOW GROUP INC – C||3.23%|
|NKE||NIKE INC -CL B||2.79%|
|PINS||PINTEREST INC- CLASS A||2.66%|
|TTD||TRADE DESK INC/THE -CLASS A||2.60%|
|EPAM||EPAM SYSTEMS INC||2.60%|
As of 9.30.2020.