PSIL: 4th Quarter 2021 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/psil.

Commentary

The AdvisorShares Psychedelics ETF (NYSE: PSIL) recently launched on September 15, 2021. In that short period since its launch, the Fund has had a loss of -44.18% on its net asset value (NAV) and -41.50% on its market price.  For the 4th quarter, the Fund lost -38.13% on its net asset value (NAV) and -36.07% on its market price.

The Fund’s overall performance is tied to the success of the very new, small and volatile psychedelics industry – meaning biotech, pharmaceutical and mental health. We do aim for relative outperformance through good individual security selection and successful trading. While short term performance of these stocks has been down rather dramatically, we remain bullish on the longer-term prospects for this rapidly developing space.

New Positions:

As psychedelics has a limited universe of stocks, only one new addition was made to the portfolio during the quarter: Bright Minds Biosciences, (NASDAQ: DRUG). Over the course of these months since launch, we regularly added on to most positions as the Fund grew.

Contributors / Detractors:

For the 3½ month period since launch, basically all the securities in PSIL were down. In future quarters I expect to be able to offer a good discussion about the winners and losers in the portfolio.

Top Holdings

Ticker Security Description Portfolio Weight %
CMPS COMPASS PATHWAYS PLC 11.09%
CYBN CYBIN INC 10.45%
ATAI ATAI LIFE SCIENCES NV 8.79%
MNMD MIND MEDICINE MINDMED INC 8.60%
FTRP FIELD TRIP HEALTH LTD 8.39%
GHRS GH RESEARCH PLC 4.96%
SEEL SEELOS THERAPEUTICS INC 4.79%
DMTTF SMALL PHARMA INC 4.75%
DRUG BRIGHT MINDS BIOSCIENCES INC 4.54%
NUMIF NUMINUS WELLNESS INC 4.27%
GBNH GREENBROOK TMS INC 4.19%

As of 12.31.2021. Cash is not included. Subject to change.

Please see our complete Fund holdings at advisorshares.com/etfs/psil. The holdings details are updated each market day.

Cheers,

Dan Ahrens
AdvisorShares
AdvisorShares Psychedelics ETF (PSIL) Portfolio Manager

 

 

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.

There is no guarantee that the Fund will achieve its investment objective. An investment in the Fund is subject to risk, including the possible loss of principal amount invested.

Psychedelic drugs, also known as hallucinogens, are a group of substances, including psilocybin, that are used to change and enhance sensory perceptions, thought processes, and energy levels. Psychedelic medicines, therapeutics, and healthcare treatments may be used in the treatment of illnesses such as depression, addiction, anxiety and post-traumatic stress disorder. Psychedelic medicine companies include life sciences companies having significant business activities in, or significant exposure to, the psychedelics industry including producers or distributors of psychedelic medicines, biotechnology companies engaged in research and development of psychedelic medicines, and companies that are part of the supply chain for psychedelics.

Psychedelics Companies Risk. Psychedelics companies are subject to various laws and regulations that may differ at the state/local and federal level. These laws and regulations may significantly affect a psychedelics company’s ability to secure financing, impact the market for psychedelics and business sales and services, and set limitations on psychedelics use, production, transportation, and storage. There can be no guarantees that such approvals or administrative actions will happen or be favorable for psychedelics companies, and such actions may be subject to lengthy delays, and may require length and expensive clinical trials. Additionally, therapies containing controlled substances may generate public controversy. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, companies and any future therapeutic candidates they may develop. All of these factors and others may prevent psychedelics companies from becoming profitable, which may materially affect the value of certain Fund investments. In addition, psychedelics are subject to the risks associated with the biotechnology and pharmaceutical industries.

In Canada, certain psychedelic drugs, including psilocybin, are classified as Schedule III drugs under the Controlled Drugs and Substances Act (“CDSA”) and, as such, medical and recreational use is illegal under Canadian federal laws. In the United States, certain psychedelic drugs, including psilocybin, are classified as Schedule I drugs under the Controlled Substances Act (“CSA”) and the Controlled Substances Import and Export Act (the “CSIEA”) and, as such, medical and recreational use is illegal under the U.S. federal laws. There is no guarantee that psychedelic drugs or psychedelic-inspired drugs will ever be approved as medicines in either jurisdiction.

In the United States, scheduling determinations by the Drug Enforcement Agency (“DEA”) are dependent on Food and Drug Administration (“FDA”) approval of a substance or a specific formulation of a substance. Unless and until psilocybin, psilocin, or other psychedelics-based products receive FDA approval, such products may be prohibited from sale, which could limit the growth opportunities for certain portfolio companies of the Fund. Even if approved by the FDA, the manufacture, importation, exportation, domestic distribution, storage, sale, and legitimate use of such products will continue to be subject to a significant degree of regulation by the DEA.

Security prices of small cap companies may be more volatile than those of larger companies and therefore the Fund’s share price may be more volatile than those of funds that invest a larger percentage of their assets in securities issued by larger-cap companies. These risks are even greater for micro-cap companies.

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 any time thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.