SURE: 3rd Quarter 2023 Portfolio Review
Portfolio Review
In the third quarter of this year, the AdvisorShares Insider Advantage ETF (SURE) demonstrated its ability to weather market turbulence, finishing with a relatively minor decline of 0.44% (NAV). This, when compared to the S&P 500 Index’s more substantial drop of 3.27%, underscores the ETF’s resilience in the face of adversity. Zooming out and looking at the trailing 12 months, SURE’s performance comes into even sharper focus. With a notable gain of 23.63% (NAV), it outpaced the S&P 500’s respectable 21.62%. Such consistent, long-term outperformance is a testament to the efficacy of the quantitative driven model behind this ETF.
In a year where most equal weight indices struggled to keep pace with their market cap-weighted counterparts, SURE’S performance underscores the robustness of its model in identifying and seizing opportunities within various sectors. A standout example is its allocation of 17.5% to the Energy sector, in stark contrast to the S&P 500’s meager 4.7%. This exposure helped SURE to capitalize on the nearly 30% gain of crude oil price over the past summer.
Source: Bloomberg, average sector weight in the trailing 12 months. As of 9/30/23
Looking ahead, we find that the broader financial landscape is not without risks and challenges, including uncertainty regarding interest rates and simmering geopolitical tensions in the Middle East. Nevertheless, there are compelling reasons to remain cautiously optimistic about U.S. equities.
First and foremost, the U.S. job market continues to display resilience. Low unemployment rates and a consistently growing payroll underscore the underlying strength of the labor market, a key driver of economic growth.
Source: Bloomberg. As of 9/30/23.
Secondly, U.S. consumer spending has demonstrated remarkable fortitude in the face of a high-interest rate environment. This sustained consumer confidence is a testament to the U.S. economy’s inherent robustness.
Lastly, corporate earnings have been a primary catalyst for market gains, propelling notable industry leaders like Apple and Nvidia to new record highs. Of particular significance is the announcement of stock buyback programs totaling a staggering $708 billion in the first three quarters of this year. We anticipate that company insiders will continue to strategically leverage any price weakness to deploy these funds to enhance the value of their stocks.
On the bond market, the US Treasury has been pummeled relentlessly this year. With the 2-year Treasury yield now passing 5%, it has indeed done some of the work for the Federal Reserve (Fed) to reduce the urgency to further hike rates this year. Any escalation of the geopolitical tensions will also likely affect the Fed’s decision making. We believe SURE can complement investors’ equity portfolio as it provides a diversified selection of companies that stand ready to repurchase their own shares with healthy free cash flow.
Source: Bloomberg. As of 10/20/23.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| AMR | ALPHA METALLURGICAL RESOURCE | 1.52% |
| CEIX | CONSOL ENERGY INC | 1.26% |
| VST | VISTRA CORP | 1.24% |
| WSM | WILLIAMS-SONOMA INC | 1.19% |
| PBF | PBF ENERGY INC-CLASS A | 1.18% |
| MPC | MARATHON PETROLEUM CORP | 1.16% |
| INSW | INTERNATIONAL SEAWAYS INC | 1.11% |
| ALSN | ALLISON TRANSMISSION HOLDING | 1.11% |
| VLO | VALERO ENERGY CORP | 1.09% |
| HRB | H&R BLOCK INC | 1.09% |
As of 09.30.2023. Subject to change.
Respectfully,
Minyi Chen
Qubed Capital, LLC
AdvisorShares Insider Advantage ETF (SURE) Portfolio Strategist
– 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.
– The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks. One cannot invest directly in an index.
*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.