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.

October 2018 Portfolio Manager Review


For the month of October the AdvisorShares New Tech and Media ETF (FNG) was down 17.73%.

October was a very volatile month for FNG and the overall markets. Earnings season started with generally strong numbers and weak guidance from a number of companies, coupled with increased Chinese/US  tariffs, rising rates and fear of another Fed raise and the markets saw their worst month since 2011.

Core holding Amazon (NASDAQ:AMZN), was down 20.22% for the month,  Alphabet (NASDAQ:GOOG) was down 9.78%,  Square Inc (NYSE:SQ) down 25.82% for the month and Netflix (NASDAQ;NFLX) down  19.34%.  Overall, the only gainer for the Fund was Amarin Pharmaceutical (NASDAQ:AMRN) up 28.03%.

As stated previously, October was an extremely volatile month for the general markets as well as FNG and we saw much larger swings throughout the group. Chips and semis were crushed after a very strong run up into earnings, cloud stocks saw robust continued growth, and the overall technology sector saw good reports with huge selloffs following their reports. We’ve seen this behavior before and the following two months have resulted in strong recoveries for the sector. One new addition to the portfolio in October, and a proof of concept that we view “FANG” as a concept and not just four names, was AMRN, a biotech which received a New Chemical Entity (NCE) designation from the FDA for its drug Vascepa, a pure fish oil component that showed a 25% relative rate of reduction in cardiovascular studies. The stock exploded from 3 to 10 and has continued to climb upward in front of their November 10th presentation at the American Heart Association annual conference, where secondary results will be released.

We will be paying particular interest to the action in November as the beaten down bellweathers post October earnings. Relative P/E numbers for the basket have reduced drastically after earnings to the point that this relatively high PE basket is actually close to S&P 500 levels when you extrapolate out to 2020. If valuations are currently only one year out for an industry average, then even at a reduced growth rate of what we’ve seen then the FANG names and basket are relatively UNDER-priced versus the rest of the market post sell-off.

Respectfully,

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


September 2018 Commentary

Top Ten Holdings

Company

Ticker

Portfolio Weight %

Amarin Pharma

AMRN

15.23%

Amazon

AMZN

11.83%

Square

SQ

7.19%

Apple

AAPL

6.62%

Microsoft

MSFT

6.55%

Mastercard

MA

6.39%

Visa

V

6.12%

Adobe

ADBE

5.88%

Twilio

TWLO

4.07%

Google

GOOG

3.89%

 

 

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:

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