FWDD

AdvisorShares Madrona Domestic 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/FWDD.

June 2018 Portfolio Manager Review


This month, markets felt the effects of heightening trade concerns as the U.S. continued its issuance of sanctions and tariffs against China. As a consequence, small cap companies, thought to be less impacted by tariff action, surpassed performance of their large cap peers.

In June, FWDD underperformed the S&P 500 by returning -0.39% in NAV while the S&P 500 Index closed at 0.62%.


Source: Morningstar

While this year has seen continued coordinated growth across the board, this month showed more signs of slowing growth. June was a poor month for large domestic tech companies directly influenced by restrictions on trade with China, and the performance of this sector was felt within our portfolio. For example, Micron Technology (MU) and Andeavor (ANDV), the two largest holdings in the FWDI portfolio, returned negative for the month. NRG Energy (NRG) and General Motors (GM), also both felt impacts of tariffs against China which would restrict exports and raise the price of imports of raw and finished materials.

FWDD Top 10 Holdings (as of 6/30/18)

Portfolio Weight

June Returns

MICRON TECHNOLOGY INC (MU)

0.66%

-8.94%

ANDEAVOR (ANDV)

0.65%

-9.17%

FREEPORT-MCMORAN INC (FCX)

0.65%

2.13%

RANGE RESOURCES CORP (RRC)

0.64%

5.75%

CBS CORP-CLASS B NON VOTING (CBS)

0.63%

11.97%

NEWFIELD EXPLORATION CO (NFX)

0.61%

3.45%

UNITED CONTINENTAL HOLDINGS (UAL)

0.61%

0.20%

GENERAL MOTORS CO (GM)

0.60%

-6.84%

NRG ENERGY INC (NRG)

0.59%

-10.31%

ENVISION HEALTHCARE CORP (EVHC)

0.59%

2.64%

Source: Morningstar

No trades were made to reallocate the FWDD portfolio in June.

Tensions with North Korea have loosened but worries over a trade war with China continue to worry domestic and international investors. Despite these concerns, we’ve seen continued appreciation of investments across the multiple asset classes and sectors this year alongside sustainably expanding corporate earnings. We believe that our domestic business environment is still conducive to long-term market appreciation. We look forward to the rest of the year and remain optimistic in the ability of FWDD to generate returns for investors in the months to come.

Respectfully,

The Madrona Funds Portfolio Management Team

Portfolio Manager of FWDD

 


April 2018 Commentary

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. The Fund may invest in large capitalization companies. During a period when the demand for large-cap securities is less than for other types of investments, the Fund's performance could be reduced. Other Fund risks include market risk, equity risk, early closing risk, liquidity risk and trading 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 anytime thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.

Definitions:

S&P 500 Index is a free-float capitalization-weighted index based on the common stock prices of 500 American companies. It is one of the most commonly followed equity indices and many consider it the best representation of the market and a bellwether for the U.S. economy. One cannot invest directly in an Index.

Price-Earnings (P/E) Ratio is the current ratio of a company’s price to its earnings.

Forward Price To Earnings (Forward P/E) is a measure of the price-to-earnings ratio (P/E) using forecasted earnings for the P/E calculation. While the earnings used are just an estimate and are not as reliable as current earnings data, there is still benefit in estimated P/E analysis. The forecasted earnings used in the formula can either be for the next 12 months or for the next full-year fiscal period.

Forward PEG Ratio (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth. In general, the Forward P/E ratio is higher for a company with a higher growth rate. It is the opinion of Madrona Funds, LLC that using just the Forward P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the Forward P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates. When calculating weighted average forward PEGs, data for any securities with negative or unavailable growth or earnings projections have been removed for calculation purposes. The forward PEG of each security is a tool used to determine whether the individual security is over or undervalued. The lower the forward PEG, the cheaper the security is relative to its projected earnings and growth.