SURE: 2nd Quarter 2023 Portfolio Review
Portfolio Review
2023 has turned out to be good for equity investors so far. In a significant policy shift, the Federal Reserve in June decided to pause its series of interest rate hikes in light of slowing inflation. This marked the first time since March 2022 that the Fed has refrained from raising rates, addressing heightened investor concerns. This pause can be viewed as a sign of stability, providing companies with clearer guidance on the borrowing landscape ahead.
Despite the high prices, the resilience of the US consumer cannot be understated. Data from the retail sector provides tangible proof of this economic vitality. US retail sales have grown consistently over the past four months. This uptrend suggests that consumer confidence remains robust, underpinned by solid job numbers and wage growth.
From Aug 15, 2022 to July 31, 2023.
As a result, there now seems to be a prevailing sentiment that the economy is headed for a soft landing rather than a hard crash. Apple’s decision to add $90 billion to its authorized buyback capacity in April and Google’s massive $70 billion buyback announcement, hot on the heels of completing a prior authorization of the same size, underscore this confidence. These buybacks not only indicate corporate optimism but also suggest that these tech giants believe their stock prices have more space to grow. The tech sector has played a pivotal role in propelling the broader market to its highest level in over a year, riding on surging enthusiasm over artificial intelligence and its myriad applications.
As of July 31, 2023.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| OC | OWENS CORNING | 1.42% |
| EXP | EAGLE MATERIALS INC | 1.35% |
| KBH | KB HOME | 1.35% |
| AAPL | APPLE INC | 1.33% |
| IDCC | INTERDIGITAL INC | 1.29% |
| AMAT | APPLIED MATERIALS INC | 1.25% |
| HCA | HCA HEALTHCARE INC | 1.25% |
| DHI | DR HORTON INC | 1.22% |
| KLAC | KLA CORP | 1.22% |
| AEL | AMERICAN EQUITY INVT LIFE HL | 1.19% |
As of 06.30.2023. Subject to change.
Outlook
With this backdrop, where does the AdvisorShares Insider Advantage ETF fit in? The ETF presents a compelling proposition, as it offers investors the potential for amplified total shareholder return, deriving benefits from both stock buyback and dividend. After witnessing a nearly 40% run in technology stocks this year, the fund also ensures that investors are not overly exposed to one sector. Instead, it provides a more balanced, diversified portfolio compared to other market cap-weighted portfolios. For investors seeking growth coupled with diversification, this ETF beckons as an attractive choice.
Respectfully,
Minyi Chen
Qubed Capital, LLC
AdvisorShares Insider Advantage ETF (SURE) Portfolio Strategist
Past Commentary
– A buyback (or repurchase) occurs when a company repurchases its own shares from the marketplace, reducing the number of shares outstanding.
– An insider is an officer, director, executive, entity, or individual that owns more than 10% of a publicly traded company’s shares.
– Insider buying is the legal purchase of shares in a firm by a corporate insider that is not based on non-public, material information and follows the U.S. Securities and Exchange Commission’s rules and reporting requirements.
*On September 1, 2022, the AdvisorShares DoubleLine Value Equity ETF (the “Predecessor Fund”) was renamed the AdvisorShares Insider Advantage ETF. The Predecessor Fund had different portfolio managers and investment strategy than the AdvisorShares Insider Advantage ETF. Performance prior to September 1, 2022 reflects the Fund’s performance prior to the change in manager and investment strategy and may not be indicative of the Fund’s performance under the new manager and revised investment strategy. Performance since September 1, 2022 reflects actual AdvisorShares Insider Advantage ETF performance.
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 the Fund’s website at www.AdvisorShares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, Distributor.
The Fund’s investment focus follows a core philosophy that corporate insiders know their companies best. The Advisor believes that insider buying and stock buyback programs not only show that corporate insiders see relative value in investing in their own company’s equity securities, but also create favorable market conditions by reducing public equity float (i.e., the share supply available to investors on the public secondary market). The Advisor allocates the Fund’s portfolio using research from a disciplined and quantitative proprietary model, the U.S. Insiders Edge Model, developed by Qubed Capital, LLC. In utilizing the model, the Advisor seeks to remove emotion from day-to-day decision-making by following a systematic process.
The Fund is an actively-managed exchange-traded fund (“ETF”) that seeks to achieve its investment objective by primarily investing in a portfolio of U.S. traded companies selected from a universe of the largest 3,000 U.S. equity securities based on market capitalization. When models and data prove to be incorrect or incomplete, any decisions made in reliance thereon expose the Fund to potential risks. In addition, the use of predictive models has inherent risk.
The views in this commentary are those of the portfolio manager/strategist 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.