GK: 1st Quarter 2025 Portfolio Review
Commentary
The first quarter of 2025 was a challenging one for the AdvisorShares Gerber Kawasaki ETF (GK), marked by significant market volatility that began in mid-February and intensified through March. What began as a strong start to the year—driven by solid economic data and market momentum—quickly reversed course due to the disruptive tariff policies implemented by President Trump.
Contrary to expectations of a pro-business administration, Trump’s sudden and aggressive trade actions destabilized global markets. By throwing trade relationships into uncertainty, both consumer and corporate confidence declined sharply. This led to a swift market correction of over 10%, with the NASDAQ briefly touching bear market territory at a 20% decline.
In response, we took several strategic steps to reposition the fund for this new economic environment:
- Risk Reduction & Defensive Posture: We reduced overall portfolio risk, increased cash reserves, and added gold as a defensive asset.
- Consumer Shift: Recognizing that rising costs would hurt discretionary spending, we reduced exposure to consumer discretionary stocks and increased allocation to consumer staples, including Walmart, which we believe will benefit as consumers look for value.
- Performance: The fund declined 10.67% (NAV) | 10.69% (market) in Q1, with the majority of losses occurring in March during peak volatility.
KEY PORTFOLIO MOVES
- Exited Dell & Lennar: We sold our positions in Dell, which continued to underperform in AI despite positive headlines, and Lennar, which faces major headwinds under the new administration. These include restrictive immigration policies, rising input costs, declining housing demand, and higher interest rates—all detrimental to homebuilders.
- Raised Cash: We increased our cash position to reduce volatility and ensure we have liquidity to take advantage of potential buying opportunities should markets fall further. As a concentrated fund with fewer than 30 positions, this cash buffer helps cushion downside movements.
- Added Meta Platforms: We added Meta as a replacement for Dell in our AI allocation. While we acknowledge ethical concerns with the company, its leadership in open-source AI models made it a compelling opportunity at current valuations.
- Gold vs. Bitcoin: We increased our allocation to gold and reduced exposure to Bitcoin, viewing Bitcoin as increasingly speculative under a Trump administration that has failed to support the crypto industry with real reform as promised. Gold has performed well as a safe-haven asset in this environment. With inflation on the rise, gold is a good hedge against inflation.
NEW POSITIONS
- JPMorgan Chase: Added for broad financial sector exposure.
- TKO Group (WWE + UFC): We believe live sports and entertainment remain high-growth areas. With UFC’s upcoming contract negotiations and growing media rights value, we see strong upside potential. TKO complements our existing entertainment holdings in Netflix, Disney, and MGM.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| NFLX | NETFLIX INC | 7.27% |
| NVDA | NVIDIA CORP | 7.11% |
| AAPL | APPLE INC | 5.95% |
| MSFT | MICROSOFT CORP | 5.85% |
| AMZN | AMAZON.COM INC | 5.15% |
| TT | TRANE TECHNOLOGIES PLC | 4.83% |
| BX | BLACKSTONE INC | 4.41% |
| AVGO | BROADCOM INC | 4.15% |
| LLY | ELI LILLY & CO | 4.06% |
| WMT | WALMART INC | 3.89% |
As of 3.31.2025. Cash is not included. Holdings are subject to change.
Outlook
We’ve repositioned the fund to be more defensive in light of Trump’s economic policies and their disruptive effects. At the same time, we’ve retained exposure to long-term innovation themes in AI and healthcare, which we believe will continue to be strong secular growth areas.
Despite the challenges, we believe the U.S. consumer remains fundamentally healthy. Any recession would be policy-induced, not driven by structural economic weakness. We also expect that the Federal Reserve will eventually be forced to lower interest rates later in the year, which could support equity markets. However, until that pivot occurs, we remain cautious on broad equity valuations.
Looking ahead, we’re actively monitoring for opportunities to add to our positions at better valuations. If the policy environment improves, our current positioning allows us to benefit from any upside that results.
We appreciate your continued trust and support. While 2025 is shaping up to be a difficult year for equities—even under the best-case scenarios—we remain focused on protecting capital, finding opportunities, and delivering strong long-term results for our clients and shareholders.
Regards,
Ross Gerber | Gerber Kawasaki | President and CEO
AdvisorShares Gerber Kawasaki ETF (GK) Portfolio Manager
Past Manager Commentary
Definitions:
S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks.
Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index.
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