DWUS: 3rd Quarter 2020 Portfolio Review

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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.

Portfolio & Holdings

The second half of 2020 has sprung forward as one of the fastest rebounds in the market over the past few decades. We have continued to see the market dominated by growth rather than value. The broad-based benchmark, the S&P 500 Index, was down almost 4% this month. The portfolio did not hold up as well as its benchmark this month as sectors overweight in the portfolio like Technology suffered from broad US market volatility. This is not a concern however as the strategy continues to have nearly a 20% lead ahead of its benchmark for the year.  Even with the volatility, we still have growth focused ETFs scoring higher than their value counterparts. This continuation of growth leading value has also been a boost to momentum strategies that tend to perform well in market environments with defined leadership.

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 50.23%
QQQ INVESCO QQQ TRUST SERIES 1 49.50%
  BLACKROCK TREASURY TRUST INSTL 62 0.27%

Top 10 Underlying Stock Exposure

Ticker Security Description Portfolio Weight %
AAPL Apple Inc. 5.47%
TSLA Tesla Inc 4.83%
AMZN Amazon.com, Inc. 4.36%
MSFT Microsoft Corporation 4.09%
NVDA NVIDIA Corporation 3.72%
ADBE Adobe Inc. 2.84%
NFLX Netflix, Inc. 2.54%
GOOGL Alphabet Inc. Class A 2.50%
GOOG Alphabet Inc. Class C 2.43%
INTC Intel Corporation 2.19%

As of 9.30.2020.

Sector Allocation

Given the overweighting of growth in DWUS, Information Technology has the largest sector exposure with 37.62%. Following behind Information Technology are Consumer Discretionary, Health Care, and Communication Services.  Sectors that have little to no exposure are Energy, Materials, Utilities, and Financials. DWUS has no sector caps which allows it to fully take advantage of dispersion between different sectors.

As of 9.30.2020.

Respectfully,

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

 

Past Commentary

Coming soon.

 


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.