(VEGA) STAR GLOBAL BUY-WRITE ETF
5 year Morningstar rating as of 8/31/2019 based on risk adjusted returns of 96 funds
The AdvisorShares STAR Global Buy-Write ETF (NYSE Arca: VEGA) seeks consistent repeatable returns across all market cycles. VEGA is sub-advised by Partnervest Advisory Services, LLC (“Portfolio Manager”). The Portfolio Manager seeks to achieve the investment objective by using a proprietary strategy known as Volatility Enhanced Global Appreciation (“VEGA”). VEGA is primarily a “fund of funds” and employs a “Buy-Write” or “Covered Call” overlay for its global allocation strategy using Exchange Traded Products (ETPs).
According to the internal benchmark policy, the Portfolio Manager will use both ETFs and individual equities to implement its tactical allocation strategy in which the volatility of each of the underlying positions determines the amount of option hedging. During periods of high volatility, the Portfolio Manager will write (or sell) a call option against some of its positions in order to hedge downside risk, while generating an income stream from the sale of options. At any given time, approximately 60% to 85% of VEGA’s positions will have covered options. Additionally when volatility is low, the portfolio manager buys protective put options to manage downside risk.
|Symbol||Exchange||Inception Date||CUSIP||Indicative Value|
<strong>Why Invest in VEGA?</strong>
- A Lower Volatility, Risk Managed Solution – VEGA’s global balanced approach achieves its low volatile mandate by 1) developing a strategic asset allocation to the equity and fixed income markets; 2) tactically overweighting the portfolio to regions, sectors, or securities; and 3) employing multiple option strategies to enhance income streams and manage downside risk. VEGA targets a 0.6 beta of the S&P 500 Index over a market cycle. Decisions on whether to write covered calls (to enhance income) or buy protective puts (to manage risk) are driven by market volatility as measured by the VIX.
- Total Return Solution – Performance for VEGA is driven by collecting multiple sources of income from bond interest, equity dividends, and option premium, as well as from potential capital appreciation of its portfolio allocations. Additionally, VEGA’s option strategies for managing risk during market drawdowns is intended to contribute to its total return over a market cycle.
- Asset Allocation – The strategy’s global balanced approach strategically allocates to bonds, equities, and alternatives through broad market ETFs and tactically overweights regions, sectors, or individual securities. Asset allocation is the first step in managing the portfolio’s overall risk metric to a 0.6 beta of the S&P 500 Index over a market cycle.
- Option Strategies for Income – The Portfolio Manager actively manages a covered call strategy on the portfolio’s holdings to add an additional income source to the bond interest and equity dividends. The cash collected from the combined income sources accumulates and serves as a second component to VEGA’s overall risk management mandate of 0.6 beta to the S&P 500 Index over a market cycle. It also “self -funds” VEGA’s internal Volatility Based Reinvestment (VBR) strategy, which is a systematic dollar cost average strategy triggered by market volatility, as measured by the VIX.
- Option Strategies for Protection – Using the cash position that accumulates from the collection of bond interest, equity dividends, and option premium, the Portfolio Manager may purchase “protective puts.” This is a third step towards managing the portfolio’s overall risk metric to a 0.6 beta of the S&P 500 Index over a market cycle.
- Harnessing Volatility – Movements in price, whether in an upward or downward manner, can be captured through the use of option contracts and be additive to total return. When volatility is high, option premiums rise and writing contracts (sell) can add to the portfolio’s income stream by collecting premium. When volatility is low, purchasing long term protective puts can be a risk management tool designed to reduce the portfolio’s downside participation.
- Total Return Solution – Performance for VEGA will be driven by collecting multiple sources of income from bond interest, equity dividends, and option premium and from capital appreciation of its portfolio holdings. Additionally, VEGA’s option strategies for managing risk during market drawdowns is intended to contribute to its total return over a market cycle.
<strong>About the Portfolio Managers</strong>
Kenneth R. Hyman, President and Chief Executive Officer
Kenneth R. Hyman founded Partnervest in 2001 and is responsible for the direction and oversight of Partnervest’s business, financial, and operational affairs. He also serves as Co-Portfolio Manager and member of the Investment Management Committee overseeing the STAR Asset Management program. Established in 2001, the Sub-Advisor provides investment management solutions to investors and the advisors that serve them. Prior to establishing Partnervest, Mr. Hyman was the Senior Executive and Financial Officer for Integral Securities, Inc. and Integral Securities Europe Ltd. Prior to Partnervest and Integral, Mr. Hyman was the Managing Principal and Chief Operating Officer of Mercer Global Securities and the Director of Operations for Mercer Global Advisors, one of the nation’s largest fee-only financial planning and investment management firms. He was also the Vice-President of Trading for Associated Financial Group, a financial services company providing support to more than 328 representatives in over 179 branch and satellite offices.
David Young, CFA, Chief Investment Officer
Mr. Young joined Partnervest Advisory Services in 2015 and serves as Chief Investment Officer and member of the Investment Management Committee. He is the founder and Chief Executive Officer of Anfield Capital Management LLC, an SEC registered investment advisory firm that specializes in risk-based global allocation and fixed income strategies. Prior to founding Anfield, Mr. Young spent 15 years at PIMCO, focusing on investment strategy, portfolio management and asset allocation. While there, he formed and chaired the first multi-asset investment committee and headed the account management group in London. Mr. Young holds the Chartered Financial Analyst designation, an MBA with a concentration in Finance from the Paul Merage School of Business at the University of California, Irvine and degrees in Economics and Political Science from UC, Irvine, where he has also served as an adjunct professor.
Rebecca M. Valdez, Director of Investments
Mrs. Valdez joined Partnervest Advisory Services in 2007 and currently serves as its Director of Investments, portfolio manager and a member of the Investment Management Committee. Mrs. Valdez has 9 years of investment management experience with a specialty in option strategies. At Partnervest her responsibilities include trading, account maintenance, strategy review and trade analysis and portfolio management. Mrs. Valdez is a Level III Chartered Financial Analyst candidate and has a degree in Economics with a concentration in Finance from California Polytechnic University, San Luis Obispo.
Peter Van De Zilver, Portfolio Manager
Mr. Van De Zilver joined Partnervest Advisory Services in 2015 and serves as portfolio manager and member of the Investment Management Committee. He is the Director of Portfolio Analytics and Risk Management at Anfield Capital Management LLC, an SEC registered investment advisory firm that specializes in risk-based global allocation and fixed income strategies. He has over 20 years of investment management experience and served in a senior position at PIMCO in the Portfolio Analytics group, where he was responsible for the architecture, development and implementation of many analytics and risk management systems. Mr. Van De Zilver holds the Chartered Financial Analyst designation and degrees in Physics, Mathematics and Economics from the Universities of Utrecht and Amsterdam, as well as an MA degree in Economics from the University of Southern California.
As of 9/17/2019
|4PM Bid/Offer Midpoint||$32.68||Premium Discount||$-0.09|
|Assets Under Management||$14,746,758.12|
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. A holding identified with an “MM” at the end of its name indicates it is a Money Market fund.
As of 8/31/2019
|NAV||Market Price Return||MSCI World Index|
|Since Inception (9/17/2012, Annualized)||4.03||3.99||9.06|
As of 6/30/2019
|NAV||Market Price Return||MSCI World Index|
|Since Inception (9/17/2012, Annualized)||4.16||4.11||9.55|
Performance data quoted represents past performance and is no guarantee of future results. All Fund data and performance data quoted is believed to be accurate, and unless otherwise stated, is sourced from the Fund administrator, the Advisor’s or Sub-Advisor’s proprietary data, and Morningstar. 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.
As of 9/17/2019
|Date||Account Symbol||Stock Ticker||CUSIP/Number||Security Description||Shares/Par (Full)||Price (Base)||Traded Market Value (Base)||Portfolio Weight %||Asset Group|
|09/17/2019||VEGA||SPY||78462F103||SPDR S&P 500 ETF TRUST||22,768.00||300.92||6,851,346.56||46.46%||MF|
|VEGA||EFA||464287465||ISHARES MSCI EAFE ETF||21,146.00||65.57||1,386,543.22||9.40%||MF|
|VEGA||IGSB||464288646||ISHARES SHORT-TERM CORPORATE||15,287.00||53.46||817,243.02||5.54%||MF|
|VEGA||XLK||81369Y803||TECHNOLOGY SELECT SECTOR SPDR FUND||7,028.00||81.29||571,306.12||3.87%||MF|
|VEGA||XLP||81369Y308||CONSUMER STAPLES SELECT SECTOR SPDR FUND||9,004.00||60.78||547,263.12||3.71%||MF|
|VEGA||XLY||81369Y407||CONSUMER DISCRETIONARY SELT||4,436.00||122.58||543,764.88||3.69%||MF|
|VEGA||BKLN||46138G508||INVESCO SENIOR LOAN ETF||23,622.00||22.81||538,817.82||3.65%||MF|
|VEGA||LMBS||33739Q200||FIRST TRUST LOW DURATION OPP||10,313.00||51.89||535,090.01||3.63%||MF|
|VEGA||HYGH||46431W606||ISHARES INT RATE HEDG HY ETF||6,008.00||88.74||533,128.29||3.62%||MF|
|VEGA||XLV||81369Y209||HEALTH CARE SELECT SECTOR SPDR FUND||5,300.00||91.45||484,685.00||3.29%||MF|
|VEGA||IWM||464287655||ISHARES RUSSELL 2000 ETF||2,769.00||157.49||436,089.81||2.96%||MF|
|VEGA||AGG||464287226||ISHARES CORE U.S. AGGREGATE BOND ETF||2,482.00||112.22||278,530.04||1.89%||MF|
|VEGA||SPYO20230||SPY US 03/20/20 P230||125.00||1.65||20,562.50||0.14%||O|
|VEGA||SPYI19299||SPY US 09/20/19 C299||(148.00)||2.71||(40,034.00)||-0.27%||O|
|VEGA||X9USDBLKR||BLACKROCK LIQUIDITY T 60||1,316,770.50||1.00||1,316,770.50||8.93%||MM|
As of 07/31/2019
VEGA Sector Allocation
Fees & Expenses
|Acquired Fund Fees||0.21%|
|Gross Expense Ratio||2.39%|
|Fee Waiver and/or Expense Reimbursement||-0.33%|
|Net Expense Ratio||2.06%|
*The Advisor has contractually agreed to keep net expenses from exceeding 1.85% of the Fund’s average daily net assets for at least one year from the date of the prospectus and for successive one-year periods thereafter unless the agreement is terminated. This agreement is limited to the Fund’s direct operating expenses and, therefore, does not apply to “Acquired Fund Fees and Expenses.”
|Ex-Date||Record Date||Pay Date||Cash Div||ST Cap Gain||LT Cap Gain||Return of Capital||Total Distribution (per share)||VEGA|