VICE: 2nd Quarter 2021 Portfolio Manager Review

Performance data quoted represents past performance and is no guarantee of future results. 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. For the fund’s most recent standardized and month-end performance, please click www.advisorshares.com/etfs/vice.

On November 1, 2020, the AdvisorShares Vice ETF changed its ticker from ACT to VICE and made a change to its investment strategy. See the prospectus for more information.

Commentary

The second quarter of 2021 was another positive period for AdvisorShares Vice ETF (NYSE: VICE). The Fund gained 4.71% on its net asset value (NAV) and 4.43% on its market price. While VICE has outpaced the S&P 500 Index year-to-date and for the one-year period ending June 30, the S&P 500 had a strong quarter of 8.55%. For the full year July 1, 2020, through June 30, 2021, VICE gained 59.98% on its NAV and 60.05% on market price while the S&P 500 returned 40.79%.*

As stated previously, the Fund underwent significant changes in the 4th quarter of 2020 with new ticker VICE and listing on the NYSE. We edited the Fund’s Principal Investment Strategy to add more gaming, food, and entertainment securities.

New Positions:

While we are always actively managing the Fund and occasionally increasing or decreasing position sizes as we see fit, some new positions added to the portfolio during the quarter included psilocybin biotech company Mind Medicine (MindMed) Inc. (NASDAQ: MNMD), plus two gun manufacturers Smith & Wesson Brands, Inc. (NASDAQ: SWBI) and Sturm, Ruger & Company, Inc. (NYSE: RGR).  SWBI and RGR are both top 5 holdings as of June 30.

As we manage the portfolio regularly, investors should notice that previous #1 and #2 holdings Boston Beer (NYSE: SAM) and Turning Point Brands (NYSE: TPB) have been reduced.

Contributors / Detractors:

The two new gun manufacturers were also among the Fund’s best contributors. Smith & Wesson gained over 58% for the quarter and Sturm Ruger gained over 13%. The leading contributor from the alcohol area was The Duckhorn Portfolio (NYSE: NAPA), up more than 31%. As of quarter end June 30, gaming headphone maker Turtle Beach Corp. (NASDAQ: HEAR) is the Fund’s largest position. It gained over 19% in the 2nd quarter.

Regarding the detractors, at least there were fewer losers than winners during the quarter. Those of note include a solid gainer in the previous quarter, Penn National Gaming (NASDAQ: PENN) that lost over 27%. Since then, we’ve added to that position. New holding MindMed was a loser down more than 23% for the quarter. Significantly, one of our traditional largest holdings Boston Beer lost over 15% in the quarter.

As I often like to repeat, for those concerned about stock market downturns or volatility with continued COVID impacts or governmental policies, VICE seeks to invest in those things people historically seem to spend money on regardless of what’s happening in the economy – in our experience vices like drinking, smoking, gambling, and gaming.

Top Holdings

Ticker Security Description Portfolio Weight %
HEAR TURTLE BEACH CORP 6.37%
SWBI SMITH & WESSON BRANDS INC 6.25%
SAM BOSTON BEER COMPANY INC-A 5.96%
RGR STURM RUGER & CO INC 4.47%
CHUY CHUY’S HOLDINGS INC 4.34%
IGT INTERNATIONAL GAME TECHNOLOG 4.23%
RICK RCI HOSPITALITY HOLDINGS INC 3.89%
GLPI GAMING AND LEISURE PROPERTIE 3.88%
FLL FULL HOUSE RESORTS INC 3.82%
VICI VICI PROPERTIES INC 3.74%

As of 06.30.2021. Cash is excluded.

Please see our complete Fund holdings at advisorshares.com/etfs/vice. The holdings details are updated each market day.

Cheers,

Dan Ahrens
AdvisorShares
AdvisorShares Vice ETF (VICE) Portfolio Manager

 

Past Manager Commentary

* Recent Fund performance is attributable to unusually favorable conditions that are likely not sustainable, and such conditions might not continue to exist.

Definitions:

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.


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 www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.

Investing involves risks including possible loss of principal. Companies in the food, beverage and tobacco industry are very competitive and subject to a number of risks. Demographic and product trends, changing consumer preferences, nutritional and health-related concerns, competitive pricing, marketing campaigns, environmental factors, adverse changes in general economic conditions, government regulation, food inspection and processing control, consumer boycotts, risks of product tampering, product liability claims, and the availability and expense of liability insurance can affect the demand for, and success of, such companies’ products in the marketplace. For a full summary of the risks, please see the prospectus.

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.

The views in this commentary are those of the portfolio manager and may not reflect his views on the date this material is distributed or any time thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.