FNG

AdvisorShares New Tech and Media ETF

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 month end performance, please click www.advisorshares.com/fund/FNG.

July 2018 Portfolio Manager Review


For the month of July, the AdvisorShares New Tech and Media ETF (FNG) was down -1.22% compared to gains of 3.72% in the S&P 500 and 2.79% in the Nasdaq Composite Index.  

July was an incredibly volatile month for both FNG and the overall markets – being the start of an earnings season and the rising of geo-political rhetoric on tariffs and Asia.  Among core holdings, Amazon (NASDAQ: AMZN) was up 4.56%, Alphabet (NASDAQ: GOOG) gained 9.10%,  Square Inc (NYSE: SQ) was up 4.88%, and Netflix (NASDAQ: NFLX) was off -13.79%.  Overall the biggest gainers for the Fund were Appfolio (NASDAQ: APPF) at 18.07%, GOOG at 9.10%, Microsoft (NASDAQ: MSFT) 7.57% and Iridum Communications (NASDAQ: IRDM) at 7.45%. The biggest losers were two shining stars from the previous month with NFLX down -13.79% and Trade Desk (NASDAQ: TTD) losing 10.1%.

As stated previously, July was an extremely volatile month for the general markets as well as FNG, with the fund itself seeing a 6% percent intra-month swing from high to low. The story of the month was earnings, earnings and earnings, with the “FANG” names being the market movers, and what a mixed bag it was. NFLX missed on subscriber growth and saw a double digit drop taking the market with it; followed by GOOG with an excellent report and moderate gains; AMZN had great earnings but lowered guidance and saw mixed results; while Facebook (NASDAQ: FB) and Twitter Inc (NASDAQ: TWTR) both had huge misses and poor guidance to absolutely destroy the NASDAQ and take the High Tech space down with them. It’s interesting to note that we’ve seen this kind of behavior during the last few earnings periods. In November we saw gains going into earnings and a sell off of technology. In late January/early February we saw the same action. April showed a similar pattern and then July was blistering post earnings with a number of companies selling off on “beats” and other companies getting absolutely punished for misses and/or poor guidance. The last three quarters saw rebounds in the months following the earnings announcement and we see no reason to expect that to change this time. To that point, a number of positions were sold off in whole or part during the month to exit July with about 30% in cash, which was mostly reinvested on August 1 into a smaller, but more concentrated, basket for FNG. It is the belief of FNG's Investment Committee that the stocks chosen to form the concentrated portfolio have much stronger fundamentals than the current price represented, and that while most issues were weak technically after the post earnings sell off and NASDAQ moving into correction territory, the stocks in the July 31 to August 1 rebalance proved too good to pass up at their current price points.

Questions did arise through mass media articles pointing out that FNG has not held Facebook since the Cambridge Analytica event, and asking why a “FANG” fund didn’t hold a “FANG” stock. As previously stated, Sabretooth Advisors views “FANG” as an idea and not a specific group of four stocks. At the turn of the 20th century it was railroad stocks, in the 1920’s it was Radio stocks, the 1990’s was Internet and dot.com stocks. Companies that had innovative technology and were changing the way people would lead their lives.

Respectfully,

Scott Freeze, chief investment officer of
Sabretooth Advisors, portfolio manager of FNG

 


June 2018 Commentary

Top Ten Holdings

Ticker Company Portfolio Weight %
AMZN Amazon.com Inc 8.58%
NTAP NetApp Inc 6.23%
APPF Appfolio Inc 5.59%
GOOG Alphabet Inc 5.41%
ADBE Adobe Systems Inc 4.85%
MSFT Microsoft Corp 4.80%
NEWR New Relic Inc 4.79%
BIDU Baidu Inc 4.77%
SQ Square Inc  4.39%
PANW Palo Alto Networks Inc 4.24%

 

Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus and summary prospectus which can be obtained by visiting www.advisorshares.com. Please read the prospectus and summary prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.

There is no guarantee that the Fund will achieve its investment objective. An investment in the Fund is subject to risk, including the possible loss of principal amount invested. When the Fund focuses its investments in a particular industry or sector, financial, economic, business, and other developments affecting issuers in that industry, market, or economic sector will have a greater effect on the Fund than if it had not done so. Market or economic factors impacting technology companies and companies that rely heavily on technological advances could have a major effect on the value of the Fund’s investments. Shares of the Fund may trade above or below their net asset value (“NAV”). The trading price of the Fund’s shares may deviate significantly from their NAV during periods of market volatility. There can be no assurance that an active trading market for the Fund’s shares will develop or be maintained. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time. Other Fund risks include market risk, liquidity risk, large cap, mid cap, and small cap risk. Please see prospectus for details regarding risk.

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.

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.

The Nasdaq Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange.