SENT: 3rd 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/sent.
Our AdvisorShares Alpha DNA Equity Sentiment ETF (SENT) delivered -3.09% returns for the 3rd quarter 2021. The markets delivered mixed returns by asset class as the Large Caps were up +0.6% (S&P 500) and the Mid/Small Cap was down -4.4% (Russell 2000). Our overall equity exposure was 40% large cap and 60% mid-small cap. Our equity portfolio delivered -2.5% contribution for the quarter. This performance is in-line with the market performance of those market cap indices as the index returns at 40/60 allocation would have delivered -2.4% returns.
However, the performance within our market caps was divergent from the indices. The mid-small cap portfolio was down -3.5% for the quarter which represents out-performance to the Russell 2000 which was down -4.4.% for the quarter. Meanwhile, our large cap portfolio was down -0.8% which represents under-performance to the S&P 500 index which was up +0.6%.
The relative performance to benchmark by market cap represents a continued theme in our portfolio as our Mid-Small Cap exposure continues to out-perform its benchmark while large cap lagged in 2021. It is also important to note the relative under-performance of the mid-small cap market indices to the larger cap market indices. The large cap space is the only index that continues to make new highs in the 2nd half of 2021. Meanwhile, indices like the Russell 2000 peaked in Q1 2021.
The sideways to down move in the Russell 2000 has also been material to the hedging performance. Sideways to down markets are not going to produce any profits in our hedges as our hedges are built to pay off on material market downdrafts only. In fact, a sideways market for a hedge is the worst outcome as we will continue to pay the time value of the index option with no tailwind benefit in the underlying index. It makes the relative cost of the hedge even worse on a comparative basis.
This last quarter, the hedge was not a significant drag but did cost us about 30 basis points. The remaining -25 basis points of return is the fees of the ETF.
In the equity portfolio, the five biggest winners in Q3 were ZScaler, PureStorage, Paylocity, Dick’s Sporting Goods, and Victoria Secret. Each of these stocks delivered returns in excess of +23% for the quarter. The top 5 biggest losers were Abercrombie & Fitech, Alpha & Omega Semiconductor, RingCentral, The RealReal, and Urban Outfitters. Each of these stocks was down at least -21%.
We will always be happy with those kind of outcomes!
|Ticker||Security Description||Portfolio Weight %|
|CRTO||CRITEO SA-SPON ADR||1.15%|
|DVN||DEVON ENERGY CORP||1.13%|
|SGMS||SCIENTIFIC GAMES CORP||1.13%|
|AAN||AARON’S CO INC/THE||1.11%|
|CCRN||CROSS COUNTRY HEALTHCARE INC||1.10%|
|VECO||VEECO INSTRUMENTS INC||1.10%|
|NVT||NVENT ELECTRIC PLC||1.09%|
|HAYW||HAYWARD HOLDINGS INC||1.09%|
As of 09.30.2021. Cash is not included.
AdvisorShares Alpha DNA Equity Sentiment ETF (SENT) Portfolio Manager