DWUS: 4th 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/dwus.

Strategy

The AdvisorShares Dorsey Wright FSM US Core ETF’s (DWUS) uses relative strength strength to allocate towards the strongest performing areas of the Large-Cap US space using broad market and factor ETFs. The strategy implements Dorsey Wright’s proprietary fund scoring method that is built around relative strength and momentum.  The top two ranked 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 Large-Cap US market, often pushing the portfolio to vary from a standard broad market benchmark.

Performance & Holdings

DWUS continues to have an overweighting to growth in its overall large cap core exposure. For the year, DWUS returned 35.88% while its benchmark, the S&P 500 Index, returned 16.26%. DWUS’s two holdings resemble two of the strongest styles and factors for the year, growth and momentum. The allocation to these two factors and the avoidance of value allowed DWUS to better weather the market sell-off in March and come out of it better than the broad large cap US equity market. The laggard rally in the fourth quarter of 2020 was a headwind for both of the DWUS’s holdings of growth and momentum, but was still able to end the quarter in the black returning 10.03%. DWUS did underperform its benchmark by 1.66% in the fourth quarter, but outperformed its benchmark for the year by 19.62%.

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 %
MTUM ISHARES MSCI USA MOMENTUM FA 50.01%
QQQ INVESCO QQQ TRUST SERIES 1 49.86%
  Cash 0.13%

Top 10 Underlying Stock Exposure

Ticker Security Description Portfolio Weight %
AAPL Apple Inc. 8.71%
MSFT Microsoft Corporation 6.98%
AMZN Amazon.com, Inc. 6.84%
TSLA Tesla Inc. 5.57%
NVDA NVIDIA Corporation 3.57%
PYPL PayPal Holdings Inc. 3.10%
GOOG Alphabet Inc. Class C 2.72%
GOOGL Alphabet Inc. Class A 2.58%
ADBE Adobe Inc. 2.50%
NFLX Netlfix, Inc. 1.96%

Cash not included. As of 12.31.2020.

Sector Allocation

Given the overweighting of growth in DWUS, Information Technology has the largest sector exposure with 44.68%. Following behind Information Technology are Consumer Discretionary, Health Care, and Communication Services.  Sectors that have little to no exposure are Energy, Materials, Utilities, Real Estate, and Financials. DWUS has no sector caps which allows it to fully take advantage of dispersion between different sectors.

As of 12.31.2020.

Respectfully,

Nasdaq Dorsey Wright
AdvisorShares Dorsey Wright FSM US Core ETF (DWUS) Portfolio Strategist

 

Past Commentary

 


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. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual issuers, industries or the securities market as a whole. 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.