SENT: 4th Quarter 2021 Portfolio Review

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Portfolio Review

Our AdvisorShares Alpha DNA Equity Sentiment ETF (SENT) delivered strong returns in Q4 given its overweight allocation to small cap stocks and its bias towards growth stocks. These groups were not in favor for the quarter as large cap stocks carried the day and the value rotation really began to pick up steam in the small cap space. The rotation to value in the mid and small cap space started in February of 2021 and has been a consistent trend which we see picking up significant momentum in 2022 so far.

The mid-small cap equity only portfolio holdings delivered around +4% returns for the quarter. The hedge on the mid-small cap portfolio holdings created around 1.5% in drag resulting in around 2.5% net returns for the hedge and equity portfolio together. Given the Russell 2000 returned only 2% for the quarter and the Russell 2000 Growth Index returned even less, we are not disappointed in this outcome in the portfolio. We will always be happy with market like returns even after the cost drag of the hedge.

The large cap equity only portfolio holdings struggled more to keep up with a strong move up in the S&P 500. The large cap equity only portion was up 9% for the quarter which lagged the S&P 500 which delivered 11% returns. The hedges on the large cap equity holdings produced a 3.5% drag resulting in around 5.3% net returns after the cost of the hedge. We’d prefer to capture more of the market upside, but the fast moving up market is often the most difficult to out-perform and 11% in one quarter for the S&P 500 is fast moving. Also, the hedges were expensive entering the quarter because of market volatility at the end of September.

SENT’s total portfolio delivered 3.3% for the quarter.

The biggest winners in the portfolio for the quarter delivering over 30% or more were Alpha & Omega Semiconductor (AOSL), Ambarella (AMBA), Cross Country Healthcare (CCRN), Macy’s (M), MaxLInear (MXL), Silicon Motion Technology (SIMO), Synaptics (SYNA), Advanced Micro (AMD), On Semiconductor (ON), and Nvidia (NVDA).

Correspondingly, the biggest losers, that produced returns -20% or less, were Prothena Corp (PRTA), BigCommerce Holdings (BIGC), Coupa Software (COUP), Domo Inc (DOMO), Exelixis (EXEL), Gap Inc (GAP), Sprout Social Inc (SPT), CrowdStrike Holdings (CRWD), Hubspot Inc (HUBS), and Snap Inc (SNAP).

Top Holdings

Ticker Security Description Portfolio Weight %
CALX CALIX INC 1.27%
VSTO VISTA OUTDOOR INC 1.21%
DKS DICK’S SPORTING GOODS INC 1.17%
BJ BJ’S WHOLESALE CLUB HOLDINGS 1.14%
SHOO STEVEN MADDEN LTD 1.14%
TSCO TRACTOR SUPPLY COMPANY 1.13%
CRTO CRITEO SA-SPON ADR 1.13%
OXM OXFORD INDUSTRIES INC 1.13%
RRR RED ROCK RESORTS INC-CLASS A 1.13%
HD HOME DEPOT INC 1.13%

As of 12.31.2021. Cash is not included.

Respectfully,

Wayne Ferbert
Alpha DNA
AdvisorShares Alpha DNA Equity Sentiment ETF (SENT) Portfolio Manager

 

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 Sub-Advisor continuously evaluates the Fund’s holdings, purchases and sales with a goal of achieving its investment objective, which is not guaranteed, and judgments about the markets, the economy, or companies may not anticipate actual market movements, economic conditions or company performance. Security prices of small and mid-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.

 Options Risk. Selling (writing) and buying options are speculative activities and entail greater than ordinary investment risks. The Fund’s use of put options can lead to losses because of adverse movements in the price or value of the underlying asset, which may be magnified by certain features of the options. When selling a put option, the Fund will receive a premium; however, this premium may not be enough to offset a loss incurred by the Fund if the price of the underlying asset is below the strike price by an amount equal to or greater than the premium. Purchasing of put options involves the payment of premiums, which may adversely affect the Fund’s performance. Purchasing a put option gives the purchaser of the option the right to sell a specified quantity of an underlying asset at a fixed exercise price over a defined period of time. Purchased put options may expire unexercised, resulting in the Fund’s loss of the premium it paid for the option.   

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.