ACT: September 2019 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/act.
The month of September was slightly negative for AdvisorShares Vice ETF (NASDAQ: ACT) down -2.00% on Net Asset Value and -1.99% on its market price. ACT, which stands for Alcohol, Cannabis, Tobacco, was designed to be a steadier, more consistent, or even recession-resistant option for cannabis-related investing. While most cannabis ETFs available in the U.S. are negative year to date through September 2019, by combining cannabis with alcohol and tobacco, ACT has gained 9.86% on Net Asset Value and 10.01% on market price for the same time frame.
Compared to our newer Pure Cannabis ETF (NYSE: YOLO) – which we know is going to be quite volatile, ACT invests in what we believe is the steady predictability of alcohol and tobacco consumption, but also in the growing overlap between alcohol, tobacco and cannabis.
Abbvie (NYSE: ABBV) is a pharmaceutical company that we hold in our top ten as cannabis related. ABBV had a strong September gaining 15.18% for the month. Previous top holding Boston Beer (NYSE: SAM) was reduced somewhat early in September. After strong gains in each of the prior 5 months, SAM dropped -16.96% in September. Brown-Forman (NYSE: BF.b) was up 7.63% in August, and gained another 6.71% in September. A stock we hold for alcohol sales, RCI Hospitality, (NASDAQ: RICK), gained 16.45% in September after being up in August too. We traded this stock, adding to it early in the month, then took the profits and greatly reduced it recently. Another top ten holding, BJ’s Restaurants (NASDAQ: BJRI), gained 6.59% in September.
During the month of September, we made only minor edits to the portfolio. Among changes, we slightly reduced (took profits) on Boston Beer and Abbvie. We also fully removed Compania Cervecerias Unidas (NYSE: CCU). We increased positions in Catalent (NYSE: CTLT) and Scotts Miracle Gro (NYSE: SMG).
|Ticker||Security Description||Portfolio Weight %|
|TMO||THERMO FISHER SCIENTIFIC INC||6.05%|
|RICK||RCI HOSPITALITY HOLDINGS INC||5.56%|
|NVS||NOVARTIS AG-SPONSORED ADR||4.95%|
|SAM||BOSTON BEER COMPANY INC-A||4.81%|
|SMG||SCOTTS MIRACLE-GRO CO||4.80%|
|LVMUY||LVMH MOET HENNESSY-UNSP ADR||4.49%|
As of 09.30.2019.
Please see our complete Fund holdings at https://etf.as/ACT. The holdings details are updated each market day.
Past Manager Commentary
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.
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. Emerging Markets, which consist of countries or markets with low to middle income economics can be subject to greater social, economic, regulatory and political uncertainties and can be extremely volatile. Other Fund risks include concentration risk, foreign securities and currency risk, ADRs which may be less liquid, large-cap risk, early closing risk, counterparty risk and trading risk, which can increase Fund expenses and may decrease Fund performance. The Fund is, also, subject to the same risks associated with the underlying ETFs, which can result in higher volatility. This Fund may not be suitable for all investors. See prospectus for detail regarding risk.
Investing involves risks including possible loss of principal. Cannabis-related companies are subject to various laws and regulations that may differ at the state/local and federal level. These laws and regulations may significantly affect a cannabis-related company’s ability to secure financing, impact the market for marijuana industry sales and services, and set limitations on marijuana use, production, transportation, and storage. In addition to regulatory action, litigation initiated by private citizens or companies could have a negative impact on the financial and/or operational status of cannabis-related companies. pronouncements from the current Administration suggest the Department of Justice (“DOJ”) may push back against states where marijuana use and possession is legal, step up the enforcement of federal marijuana laws and the prosecution of nonviolent federal drug crimes and, in the event the Rohrabacher- Farr amendment is not renewed by Congress, begin using federal funds to prevent states from implementing laws that authorize medical marijuana use, possession, distribution, and cultivation. Such actions by the DOJ could produce a chilling effect on the industry’s growth and discourage banks from expanding their services to cannabis-related companies where such services are currently limited.
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.