FWDB: May 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.
FolioBeyond’s automated asset allocation strategy of FWDB generated returns of +0.50% in May in comparison to +1.78% for the Bloomberg Barclays US Aggregate Bond Index (“Index”), underperforming the Index by 128 basis points. However, FWDB returned 6.59% (NAV) year to date, while the Barclays Agg returned 4.80%.
The Treasury market rallied significantly as heightened concerns regarding growth prospects were further exacerbated by ongoing trade and tariff related disputes. The 10-year Treasury yield dropped by 37 basis points while the 2-year Treasury fell by 32 basis points. Credit spreads widened as spread products lagged Treasuries.
The major drivers of positive returns in May for FWDB were long duration Treasuries, followed by long duration municipal credit. High yield corporate credit and bank loans generated small losses as credit spreads widened. During the month, the relative cheapening of high yield corporate bonds resulted in our model rebalancing out of a portion of our bank loan exposure into a standard high yield corporate bond ETF.
As of 05.31.2019
The anticipated fed cuts and benign fundamentals in the corporate credit market bode well for our fixed income strategy in the coming months as spread products are likely to normalize relative to Treasuries. The adjusted yield profile of our portfolio (after incorporating default and option costs) has increased by 27 basis points to 5.16% since the end of April, indicating good relative value in comparison to Treasuries.
|Ticker||Security Description||Portfolio Weight %|
|HYD||VANECK VECTORS HIGH-YIELD MU||21.25%|
|SJNK||SPDR BBG BARC ST HIGH YIELD||20.66%|
|TLT||ISHARES 20+ YEAR TREASURY BOND ETF||13.87%|
|BKLN||INVESCO SENIOR LOAN ETF||13.11%|
|HYG||ISHARES IBOXX HIGH YLD CORP||13.05%|
|HYMB||SPDR NUVEEN S&P HIGH YIELD M||9.13%|
|SHYG||ISHARES 0-5 YR HY CORP BOND||8.85%|
As of 05.31.2019.
CEO of Folio Beyond
AdvisorShares FolioBeyond Smart Core Bond ETF (FWDB) Research Strategist
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.