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FWDB: June 2019 Portfolio 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/fund/fwdb.

Commentary

FolioBeyond’s automated asset allocation strategy of FWDB generated returns of +1.60 % in June in comparison to +1.26% for the Bloomberg Barclays US Aggregate Bond Index (“Index”), outperforming the Index by 34 basis points.

The Treasury market continued to rally, albeit at a slower pace, with the yield curve (between the 2-year and 10-year Treasuries) steepening by 6 basis points during the month.  As the Fed shifted to becoming more accommodative, various fixed income sectors firmed up with investors taking advantage of relative value opportunities.

The FolioBeyond fixed income model rebalanced out of intermediate/long term high yield corporate exposure and most of bank loan exposure in favor of mortgage REITs (primarily agency MBS REIT exposure).  Changes in relative value relationships contributed to this portfolio rebalancing.


As of 06.30.2019.

From a broader perspective, there have been more discussions recently regarding the potential benefits of factor investing in the fixed income world.  FolioBeyond has been in the forefront of this approach with models that captures value, momentum, volatility, correlation and stress testing, all incorporated within an advanced optimization framework.  The algorithm is dynamic and re-evaluates the portfolio on a daily basis, with specified rebalancing thresholds.  It is systematically comprehensive and avoids qualitative and macro biases.  The dynamic nature of the changing relationships in the capital markets can be effectively captured using this type of advanced modelling approach.  Please contact us if you would like more information on our models and strategy.

Top Holdings

Stock Ticker Security Description Portfolio Weight %
REM ISHARES MORTGAGE REAL ESTATE 29.68%
HYD VANECK VECTORS HIGH-YIELD MU 21.04%
SJNK SPDR BBG BARC ST HIGH YIELD 20.67%
HYMB SPDR NUVEEN S&P HIGH YIELD M 9.02%
TLT ISHARES 20+ YEAR TREASURY BOND ETF 8.99%
SHYG ISHARES 0-5 YR HY CORP BOND 8.87%
BKLN INVESCO SENIOR LOAN ETF 1.49%

As of 06.30.2019.

Respectfully,

Yung Lim
CEO of Folio Beyond
AdvisorShares FolioBeyond Smart Core Bond ETF (FWDB) Research Strategist

 

Past Portfolio Commentary

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. ETNs have a maturity date and generally, are backed only by the creditworthiness of the issuer. The value of an ETN may be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in the underlying market (e.g., the commodities market), changes in applicable interest rates, and changes in the issuer’s credit rating and economic, legal, political or geographic events that affect the market. Other Fund risks include market risk, equity risk, early closing risk, liquidity risk and trading risk. The Fund will be subject to the risks associated the Underlying ETFs’ or ETP’s investments such as commodity risk, concentration risk, credit risk, fixed income risk, high yield risk, income risk, interest rate risk, and investment 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.