(VEGA) STAR GLOBAL BUY-WRITE ETF
The AdvisorShares STAR Global Buy-Write ETF (NYSE Arca: VEGA) is a low volatility, moderate risk, global balanced portfolio that strategically allocates to the capital markets, tactically overweights regions, sectors, or securities and employs option strategies to create additional sources of income for total return and enhancements to risk management. The Portfolio Manager writes (sells) covered call options against a portion of its underlying holdings creating option premium; generally, 50% to 75% of VEGA’s positions will have covered options. This extra source of income, along with the bond interest and equity dividends collected on the portfolio, can assist in hedging downside risk. This collective income stream also serves as the “funding source” for an internal systematic reinvestment strategy called Volatility Based Reinvestment (VBR). When equity volatility is high, as gauged by the VIX’s 200-day moving average, VEGA reinvests its cash positions back into the capital markets. When volatility is low, the Portfolio Manager may allocate a portion of VEGA’s cash position to protective put options for downside risk management. Over a market cycle, VEGA’s risk objective is 0.6 beta of the S&P 500 Index. While VEGA isn’t managed to a specific benchmark, the MSCI All Country World Index (ACWI) and the Bloomberg Barclays Aggregate Bond Index are appropriate for comparison purposes for the equity and fixed income portions of the portfolio, respectively.
<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.
- Alternatives Solution – Highlighting the varying option strategies, VEGA can be part of an alternative sleeve within a portfolio. Selling covered calls creates an additional source of portfolio income and buying protective puts may enhance a portfolio’s risk metrics.
- 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, Executive Vice President (EVP)
Mr. Hyman serves as an EVP and portfolio manager for the Sub-Advisor. Mr. Hyman joined the Sub-Advisor in October 2020 after the Sub-Advisor acquired substantially all of the assets of Partnervest Financial Group LLC and those of its subsidiaries, including Partnervest Advisory Services, LLC, the former sub-advisor to the Fund. Mr. Hyman founded Partnervest Financial Group, LLC in 2001 and was responsible for the direction and oversight of its business affairs and served as a portfolio manager and member of the Investment Management Committee. Established in 2001, Partnervest provided investment management solutions to investors and the advisors that served them. Mr. Hyman also provided consulting services to Elysian Capital Holdings LLC, an equity owner of Partnervest and served as the Chief Compliance Officer of its subsidiaries, Elysian Capital Markets Group, LLC and MIT Associates, LLC. Prior to establishing Partnervest Financial Group, LLC, Mr. Hyman was the Senior Executive and Financial Officer for Integral Securities, Inc. and Integral Securities Europe Ltd. He was also the Founder of a financial services consulting firm that operated under the name “Partnervest” and specialized in operations, e-commerce, financial operations, compliance and regulatory issues, product and service development, and business strategies. Prior to his time at 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.
Jason Scott, Director of Asset Management
Mr. Scott is responsible for asset analyses and due diligence for the Sub-Advisor. He serves as Chairman of the Investment Committee, Co-Portfolio Manager and advises on investment management solutions. Mr. Scott is experienced in portfolio management, including investment analysis, option-based strategies, trading and managing client relationships. Prior to joining the Sub-Adviser, Mr. Scott oversaw portfolio management for Northwestern Mutual Investment Services located in the Kansas City area from 2019 to 2021. While there, he was responsible for choosing investments and analyzing and building portfolios for clients, including those with high net worth. Prior to that, he was with American Century Investments, providing investment management solutions from 2014 to 2019. Mr. Scott is a Chartered Market Technician (CMT®) and incorporates technical, quantitative, and qualitative methodologies into his approach to managing investments. An educator at heart, Mr. Scott received his M.S. in Education from Southwest Baptist University in Bolivar, Missouri and holds his Series 7, 65, and 63 licenses.
|Assets Under Management||$40,184,433.14|
|30-Day Median bid-ask Spread||0.54|
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.
As of 9/30/2022
|NAV||Market Price Return||MSCI World Index||MSCI ACWI Index|
|Since Inception (9/17/2012, Annualized)||3.43||3.43||8.52||7.60|
As of 9/30/2022
|NAV||Market Price Return||MSCI World Index||MSCI ACWI Index|
|Since Inception (9/17/2012, Annualized)||2.96||2.98||7.84||7.04|
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.
|Date||Account Symbol||Stock Ticker||Security Number||Security Description||Shares/Par (Full)||Price (Base)||Traded Market Value (Base)||Portfolio Weight %||Asset Group|
|12/01/2022||VEGA||SPY||78462F103||SPDR S&P 500 ETF TRUST||39,087.00||407.38||15,923,262.06||39.63%||MF|
|EFA||464287465||ISHARES MSCI EAFE ETF||82,941.00||67.77||5,620,911.57||13.99%||MF|
|IUSB||46434V613||ISHARES CORE TOTAL BOND ETF||120,622.00||45.76||5,519,662.72||13.74%||MF|
|IWP||464287481||ISHARES RUSSELL MID-CAP GROW||35,611.00||89.88||3,200,716.68||7.97%||MF|
|EEM||464287234||ISHARES MSCI EMERGING MARKET||55,322.00||39.39||2,179,133.58||5.42%||MF|
|MBB||464288588||ISHARES MBS ETF||16,727.00||94.37||1,578,526.99||3.93%||MF|
|TLH||464288653||ISHARES 10-20 YEAR TREASURY||10,893.00||113.01||1,231,017.93||3.06%||MF|
|MTUM||46432F396||ISHARES MSCI USA MOMENTUM FA||7,668.00||152.01||1,165,612.68||2.90%||MF|
|GOVT||46429B267||ISHARES US TREASURY BOND ETF||33,762.00||23.14||781,252.68||1.94%||MF|
|SJNK||78468R408||SPDR BLOOMBERG SHORT TERM HI||31,255.00||24.74||773,248.70||1.92%||MF|
|IWM||464287655||ISHARES RUSSELL 2000 ETF||4,118.00||186.96||769,901.28||1.92%||MF|
|0163XW6B8||EFA US 12/16/22 C68||-581||0.84||-48,804.00||-0.12%||O|
|016WPSKP2||SPY US 12/16/22 C419||-332||2.32||-76,858.00||-0.19%||O|
|X9USDBLKR||BLACKROCK LIQUIDITY T 60||1,651,385.63||1||1,651,385.63||4.11%||MM|
As of 10/31/2022
VEGA Sector Allocation
Fees & Expenses
|Acquired Fund Fees(b)||0.18%|
|Total Annual Operating Expenses||2.03%|
(a) Restated to reflect current fees.
(b) Total Annual Operating Expenses and Total Annual Operating Expenses After Waiver/Reimbursement in this fee table may not correlate to the expense ratios in the Fund’s financial highlights. For more information, please read the full prospectus.
(c) 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. For more information, please read the full prospectus.
|Ex-Date||Record Date||Pay Date||Cash Div||ST Cap Gain||LT Cap Gain||Return of Capital||Total Distribution (per share)|