SURE: 3rd Quarter 2024 Portfolio Review
Portfolio Review
The trend of significant spending on stock repurchases persisted in Q3 2024. US public companies added $281 billion in new stock buyback capacity over the past three months, bringing the total for the first three quarters of the year to $964 billion. This marks a 36% increase from 2023 and sets a new record high.
Source: Qubed Capital, LLC
Amid sustained stock repurchase activity, the AdvisorShares Insider Advantage ETF (ticker: SURE) posted a strong 6.28% gain in the third quarter. A robust earnings season, combined with a surprise 50-basis-point rate cut, provided substantial support for US equities.
Industrials as a sector was a standout performer within the SURE portfolio in Q3, continuing its upward trajectory that began a year ago. Unprecedented spending through federal stimulus and private investment in infrastructure and manufacturing is expected to continue providing tailwinds for industrial companies involved in equipment rentals, renewables, and other climate-related products. Additionally, commercial aerospace demand may see further upside, supported by resilient domestic travel and accelerated international momentum.
Financials also played a significant role in contributing to total returns last quarter. Although the Federal Reserve may have initiated a new cycle of rate cuts, which could pressure net interest income, lower rates may help alleviate concerns surrounding commercial real estate. Furthermore, economic and geopolitical uncertainty is likely to support equity trading revenue, as well as underwriting and M&A activity heading into 2025.
Q3 underscored the importance of a balanced investment approach, as crowded themes can backfire with little warning. For example, the tech-heavy Nasdaq-100 Index experienced a steep decline of up to 13.56% between July and August. In contrast, the AdvisorShares Insider Advantage ETF benefited from its more conservative allocation to the technology sector. With only 17.5% of its portfolio in technology companies—compared to over 31% in the S&P 500 Index—SURE was better insulated from unexpected volatility in the sector.
Source: Bloomberg
Looking ahead to Q4 2024, investors will certainly be closely monitoring the upcoming presidential election and the possibility of two additional interest rate cuts. These events are likely to shape market sentiment and create both opportunities and challenges towards the end of 2024.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| LVS | LAS VEGAS SANDS CORP | 1.25% |
| WYNN | WYNN RESORTS LTD | 1.22% |
| PRGS | PROGRESS SOFTWARE CORP | 1.12% |
| EXP | EAGLE MATERIALS INC | 1.10% |
| URI | UNITED RENTALS INC | 1.09% |
| CAT | CATERPILLAR INC | 1.08% |
| EBAY | EBAY INC | 1.07% |
| LPX | LOUISIANA-PACIFIC CORP | 1.07% |
| OLN | OLIN CORP | 1.07% |
| PHM | PULTEGROUP INC | 1.07% |
As of 9.30.2024. Subject to change.
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.
– 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 or summary 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.