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(SCAP) Cornerstone Small Cap ETF

Overview

How SCAP Works

The AdvisorShares Cornerstone Small Cap ETF (NYSE Arca: SCAP) seeks to provide total return through long-term capital appreciation and current income. SCAP is managed by Cornerstone Investment Partners, LLC (“Portfolio Manager”). The Portfolio Manager seeks to achieve SCAP’s investment objective by investing in a diversified group of U.S.-traded equity securities, including common and preferred stock, ADRs, and publicly-traded REITs. Under normal circumstances, SCAP invests at least 80% of its net assets (plus any borrowings for investment purposes) in small cap securities. The Portfolio Manager defines a small cap company as one having a market capitalization less than the market cap of the largest company in the Russell 2000 Index at the time of acquisition. The Portfolio Manager seeks to benefit from the volatility of small cap stocks by participating in upside volatility while reducing exposure to downside volatility.

Fund Documents

Portfolio Manager Commentaries

SCAP in the News

12/29/2016 -

AdvisorShares Press Release, AdvisorShares Announces December 2016 Distributions

11/03/2016 -

(Audio) John Campbell on Bloomberg Radio: "Cornerstone’s Campbell: Look For Free Cash Flow in Small-Caps" on "Bloomberg Markets AM with Pimm Fox and Lisa Abramowicz." bloomberg.com

Performance -Month-End

SCAP Performance History (%) as of 11/30/2017
 NAVMarket Price ReturnRussell 2000 Index
1 Month1.711.712.88
3 Months10.0310.0510.23
YTD16.9416.9215.11
1 Year18.9618.9418.34
3 Years13.25N/A11.14
5 Years17.70N/A15.02
Since Inception*
17.48N/A14.51

Performance -Quarter-End

SCAP Performance History (%) as of 9/30/2017
 NAVMarket Price ReturnRussell 2000 Index
1 Month7.157.196.24
3 Months8.658.695.67
YTD13.8713.8810.94
1 Year23.6923.7420.74
3 Years14.68N/A12.18
5 Years16.97N/A13.79
Since Inception*
17.49N/A14.20

*Simultaneous with the commencement of the Fund’s investment operations on July 7, 2016, a separate account (the “Predecessor Account”), which was managed by the same portfolio management team, converted into the Fund. The Predecessor Account began trading June 30, 2012. All performance prior to July 7, 2016 represents actual trading of the Predecessor Account and has not been restated to reflect the estimated total annual operating expenses of the Fund, which, if reflected, would lower returns. Performance after July 7, 2016 is reflective of the total annual operating expenses of the Fund.

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.

The Russell 2000 index is an index measuring the performance approximately 2,000 small-cap companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. One cannot invest directly in an index.

Fund Distributions

Ex-DateRecord DatePay DateCash DivST Cap GainLT Cap GainReturn of CapitalTotal Distribution
12-22-17
12-27-17
12-29-17
-----
12-23-16
12-28-16
12-30-16
$0.0301$0.00$0.00$0.00$0.0301/per share
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Why Invest in SCAP?

  • For Equity Diversification - Small cap exposure can help diversify an equity portfolio by providing access to companies that are growing at a faster rate than large cap companies. Small cap equities also have had the tendency to make major turns in their respective cycles at different times which can help reduce volatility. Additionally, small cap company businesses tend to be more domestic oriented which insulates them from changes in currency market trends.
  • For an Active Management Advantage - Not all 2000 companies in the popular Russell benchmark index are worthy of buying. An index includes stocks with favorable valuations, favorable earnings trends and favorable free cash flow, but also must include stocks with unfavorable attributes. The Portfolio Manager’s multi-factor approach helps identify attractive companies with improving fundamentals.
  • As a Compliment to Index Based Exposure - SCAP differs from benchmark indexes in terms of sector weightings, market cap statistics, valuation and other traditional measures of equity analysis, which can help reduce correlation.

Where can SCAP Fit in a Traditional Portfolio?

SCAP offers investors an alternative to small cap exposure through an index fund. Investors who want small cap don’t necessarily want market cap weighted funds which tend to be dominated by one or two sectors.

5 Key Attributes

  1. Disciplined Investment Philosophy - The Portfolio Manager's investment philosophy is based on the view that the market often misprices fundamental improvements and is slow to recognize improving fundamentals, particularly in small cap stocks.
  2. Multi-Factor Security Selection - In selecting securities for SCAP, the Portfolio Manager considers many factors such as improvements in earnings estimates, positive earnings surprises, tangible book value and financial flexibility measured by a company’s ability to fund operations out of free cash flow.
  3. Elimination of Unqualified Companies - While the portfolio is diversified, unlike an index, the Portfolio Manager eliminates those companies with weak fundamentals as part of the security selection process.
  4. Quarterly Reconstitution - The portfolio is partly reconstituted each quarter, which ensures it responds to changes in market conditions and targets the most attractive securities, while limiting annual turnover.
  5. Focused Experience - The Portfolio Manager is comprised of veteran investors who have worked together for many years, adhering to the same disciplined investment philosophy.

About the Portfolio Managers

John Campbell, CFA
John serves as Chief Investment Officer and is a Partner for Cornerstone. He is a member of the Board of Directors. John had a 12 year tenure at Invesco Capital Management where he was a Global Partner and Portfolio Manager. In his last five years, John was in charge of managing Invesco Capital US Large Cap Value portfolio. He was also one of five members of the International Investment Committee, which managed over $15 Billion in assets. John graduated from State University of New York at Fredonia in 1981 with a degree in business finance. In the past he has been a CFA review course instructor, test grader, and exam writer.

Dean W. Morris, CFA
Dean is a Partner for Cornerstone and is responsible for research and portfolio management. Prior to Cornerstone, Dean was a Partner and Senior Director at Invesco Capital Management for 10 years. Dean co-managed the Invesco Capital Management U.S. Large Cap Value Portfolio with John Campbell for five years, in addition to providing research on U.S. financial stocks. Dean is a graduate of Williams College and holds an MBA from the University of Chicago.

Rick M. Van Nostrand, CFA
Rick is a Partner for Cornerstone and is responsible for research and portfolio management. He is a member of the Operating Committee. Prior to Cornerstone, Rick was a voting member of the investment committee at EARNEST Partners and served on the Fundamental Value product at Invesco Capital Management. He earned a MBA with a concentration in Finance from the Wharton School at the University of Pennsylvania, and holds a Bachelor of Science in Computer Science Engineering from Southern Methodist University.

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Manager Minutes, November 2017

AlphaCall, September 2017

Price History

As of: 12/10/2017
NAV$34.38Closing Price$34.36
Change$-0.02Change$0.00
Shares Outstanding136,476Volume0
4PM Bid/Offer Midpoint$34.39Premium/Discount$0.01
Assets Under Management$4,692,309.49
Premium/Discount Historical Data

Holdings

As of: 12/10/2017

 

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.

Fund Basics

  • Symbol

    SCAP

  • Exchange

    NYSE Arca

  • Inception Date

    07/06/2016

  • CUSIP

    00768Y586

  • Indicative Value

    SCAP.IV

  • Options

    No

Fees & Expenses

  • Management Fee

    0.65%

  • Other Expenses

    3.26%

  • Gross Expense Ratio

    3.91%

  • Fee Waiver and/or Expense Reimbursement

    -3.01%

  • Net Expense Ratio

    0.90%*

  • *The Advisor has contractually agreed to keep net expenses from exceeding 0.90% 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.