DWSH: 1st Quarter 2021 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/dwsh.
The AdvisorShares Dorsey Wright Short ETF (Ticker: DWSH) is built on the relative strength testing that Dorsey Wright has been doing for over almost two decades. Rather than investing in those companies that are exhibiting the strongest relative strength however, we identify the bottom tier or laggards and short them. Shorting using relative strength is by no means a new idea, when reading academic literature on momentum from the past 40 years, the idea of buying the past winners and shorting the losers is often found to be a sensible allocation.
Our vision for utilizing the strategy is twofold. First is can be used as a hedge against downside US equity volatility, helping to reduce the volatility of the portfolio by pairing DWSH with a traditional long portfolio. The second is using the strategy as an alpha bet during period of market distress. During period of high dispersion among securities, there are well-defined winners and losers. Rather than buying a broad short of the whole market, we systematically invest in companies that are identified to be weak and have a greater chance in our opinion of dropping more than the other companies drop in the universe.
The start to 2021 has been reminiscent of the second half of 2020 – a bull market that seems unstoppable even in the face of possible trouble. Unlike the second half of last year, this market seems to be shifting its leader and laggards as new trend begin to emerge in the reopening economy. Looking forward to 2021, we continue to see a need for tactical application of short strategies as the markets digest increased interest rates, possible inflation and a ballooning US deficit.
Top 10 Holdings
|Ticker||Security Description||Portfolio Weight %|
|BLUE||BLUEBIRD BIO INC||-1.24%|
|POR||PORTLAND GENERAL ELECTRIC CO||-1.13%|
|HII||HUNTINGTON INGALLS INDUSTRIE||-1.11%|
|WEC||WEC ENERGY GROUP INC||-1.11%|
|WM||WASTE MANAGEMENT INC||-1.11%|
|AMT||AMERICAN TOWER CORP||-1.10%|
|DISH||DISH NETWORK CORP-A||-1.10%|
|CBOE||CBOE GLOBAL MARKETS INC||-1.09%|
As of 03.31.2021
The portfolio has continued to adapt to changes in the market, as the leaders and laggards continue to respond to an ever-extending bull market that has broken multiple highs over the course of the quarter. Several changes were made but the largest was over the past month which saw a large reduction in the number and weight of the Energy shorts, while Utilities and Consumer Non Cyclicals dramatically increased its portfolio weight.
As of 03.31.2021.
John G. Lewis
Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright Short ETF (DWSH) Portfolio Manager
Past Manager Commentary