HOLD: July 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/hold.
During the month of July, the AdvisorShares Core Reserves (NYSE Arca: HOLD) returned 0.50% vs 0.01% on the 1-3 month T-bill Index. The fund paid out income of 10.7 cents per share, for a Bloomberg indicated yield of 1.30%. The Bloomberg Barclays US Corporate 1-3 Year Average OAS was 13 basis-points tighter on the month, ending at 0.60%.
Industrials were the best performing corporate subsector, returning 0.88% during the month of July. Among the better performing positions were the QVC 2023’s, Dish 2021’s, and Delta Air Lines 2020’s, which returned 4.53%, 2.06%, and 1.72%.
Financial Institutions, which comprise 22% of the portfolio, returned 0.31%. Among the better performers were the JPM 2021’s, Ares Capital 2022’s, and the International Lease Finance 2020’s, which returned 1.79%, 0.93%, and 0.82%.
Within the securitized sector, ABS returned 0.13% on the month. This sector continues to see strong demand as the market looks for any spread pickup via high quality assets.
During the month of July there was $1,519m in maturities and structured product paydowns. Some of the larger corporate purchases include Truist Bank 2021’s, Daimler Finance 2021’s, and Wells Fargo 2020’s.
Recent Headlines / Looking Ahead
Over the past month risk-assets have continued to do well despite the significant uncertainty regarding both the health crisis and the upcoming presidential election. This has been driven by the growth in the Fed’s balance sheet, up 3 trillion dollars since the beginning of the pandemic. Fed Chairman Powell has made it clear he will do whatever is necessary to uphold the market, which has given confidence to investors, despite the current situation. However, with unemployment benefits about to expire, all eyes are currently on Washington in hopes that a second stimulus bill will continue to keep struggling Americans afloat. If politicians fail to reach an agreement, markets could decline at the thought of double-digit unemployment and decreasing government benefits.
|Security Description||Price $||Portfolio Weight %|
|US TREASURY N/B 1.125 2/28/2021||100.58||5.09%|
|US TREASURY N/B 1.25 3/31/2021||100.75||5.09%|
|US TREASURY FRN FRN 4/30/2022||100.13||4.91%|
|US TREASURY N/B 1.375 4/30/2021||100.93||3.39%|
|BANK OF AMERICA CORP 3.499 5/17/2022||102.35||2.59%|
|EDISON INTERNATIONAL 2.4 9/15/2022||102.17||2.22%|
|OCCIDENTAL PETROLEUM COR 2.6 8/13/2021||98.94||2.02%|
|CCCIT 2018-A1 A1 2.49 1/20/2023||101.04||1.98%|
|AMXCA 2017-6 A 2.04 5/15/2023||100.36||1.94%|
|ELANCO ANIMAL HEALTH INC 4.662 8/27/2021||104.56||1.78%|
As of 7.30.2020. Excludes cash and money markets.
|Portfolio Characteristics||Yield-to-Worst||Coupon||Maturity (Yrs)||Effective Duration|
|as of 7.31.2020||0.950||2.672||1.260||0.690|
Source: Sage Advisory Services; All data as of 7.31.2020.
Credit quality ratings are primarily sourced from Moody’s but in the event that Moody’s has not assigned a rating the Fund will use Standard & Poor’s (the “S&P”). If these ratings are in conflict the most conservative rating will be used. If none of the major rating agencies have assigned a rating the Fund will assign a rating of NR (non-rated security). The ratings represent their (Moody’s and S &P) opinions as to the quality of the securities they rate. Ratings are relative and subjective and are not absolute standards of quality. The credit ratings are published rankings based on detailed financial analyses by a credit bureau specifically as it relates the bond issue’s ability to meet debt obligations. The highest rating is Aaa, and the lowest is D. Securities with credit ratings of Bbb and above are considered investment grade.