DWMC: 4th Quarter 2020 Portfolio Manager 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/dwmc.
The AdvisorShares Dorsey Wright Micro-Cap ETF (DWMC) uses relative strength to allocate towards areas of strength in the micro-cap market. The portfolio is systematically managed and reviewed on a daily basis using the Dorsey Wright relative strength ranks. The strategy starts with the smallest 2,000 companies that trade on a US exchange; the securities are then screened for size and liquidity. The companies are each given a relative strength score and the portfolio allocates to approximately 150 – 200 companies that are in the top quartile of the rankings. Securities included are roughly equal- weighted based on the available cash at the time of purchase. This universe and the portfolio are ranked and evaluated for changes on a daily basis. Once a company’s rank fall below a preset threshold, it is removed from the portfolio and the portfolio reallocates to higher relative strength names.
2020 will be a year that is burned in our collective consciousness as one of trials and triumphs. In 2020 we saw a record decline in the global markets that ended the longest U.S. bull market in history as Covid began to devastate the globe. We also saw one of the sharpest rebounds off of the bottom in history, and by the end of the year we had made several new highs in U.S. Equity markets. While not all markets responded in such a resound way, equities as a whole had a strong year.
The smallest companies in the market were benefactors in this rally, as Microcap stocks outpaced Large Cap equities for the first time in recent history. The strategy was able to capitalize on this positive trend and thanks to strong stock selection was able to outpace the broad Microcap market. This largely came from the second half of the year after markets continued to recover from the lows of the March sell off.
Top 10 Holdings
|Ticker||Security Description||Portfolio Weight %|
|CELH||CELSIUS HOLDINGS INC||3.35%|
|APPS||DIGITAL TURBINE INC||3.32%|
|KNSL||KINSALE CAPITAL GROUP INC||1.62%|
|AMRC||AMERESCO INC-CL A||1.43%|
|TWST||TWIST BIOSCIENCE CORP||1.29%|
|OCUL||OCULAR THERAPEUTIX INC||1.17%|
|KRNT||KORNIT DIGITAL LTD||1.17%|
As of 12.31.2020. Cash is not included.
The strategy is positioned to overweight or underweight sector allocations dependent on the relative strength of the investable universe and the portfolio allocation. The sector weight is entirely determined by the strength of the individual names in the portfolio and those that are selected based on the strategies technical buy process.
Over the course of the year we saw several shifts in the constituents, with the portfolio removing over 300 names as momentum in the markets shifted to favor more technology and Healthcare companies. This shift is reflected not only in the removals of the lagging names, but the continued strength and growth of the strong securities. Overall Industrials, Technology and Healthcare dominated the portfolio from an allocation and return perspective early in the year and continued to maintain that leadership through the melt up. Overall we believe the portfolio is well positioned to respond to the changes and events that 2021 has to offer.
As of 12.31.2020.
As of 12.31.2020.