YOLO: April 2019 Inaugural 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/fund/yolo.
AdvisorShares is excited to launch the new AdvisorShares Pure Cannabis ETF (NYSE Arca: YOLO). The Fund launched at the market open on April 18. We are the first ETF of its kind – focusing on cannabis, having full regulatory approval, being actively-managed, U.S. domiciled and listed, and partnering with a real U.S. Federal custody bank. YOLO is investing in the actual cannabis business leaders, including the Canadian marijuana cultivation companies – as long as they’re large enough, liquid enough and exchange-listed.
We’re excited about the huge long-term growth potential of the cannabis business. Investable cannabis is changing rapidly as laws continue to change and social acceptance continues to expand.
Cannabis-related companies can fall into numerous categories including biotechnology, pharmaceutical, agriculture, and even real estate, retail and finance – technically, there is no “cannabis” industry designation). We are very confident that the list of “investable companies” related to cannabis will continue to grow.
It is important to remain cognizant that the cannabis marketplace is new and rapidly changing. Some companies will be very successful. A great many will not. We feel strongly that active management is key to investing in an evolving industry, such as cannabis. Careful stock selection and daily portfolio management are imperative. Index-based, passive ETFs that must blindly follow an index may be too slow to react to changes. We think that we can do much better with in-depth research, good trading techniques, and the ability to act quickly. New cannabis-related stocks are coming to market all the time. We can quickly add new stocks, including IPOs, as we see fit. Additionally, we expect there to be significant merger and acquisition activity in the cannabis space as expansion continues. Those acquisitions could boost our Fund’s performance.
AdvisorShares Pure Cannabis ETF, as the name implies, is about investing in pure cannabis exposure. We own growers, distributors, biotech, and pharma – marijuana that’s recreational or medical. In this Fund, we are not investing in big tobacco, suppliers, accessories or other things that are just somewhat “related” to cannabis.
We look forward to bringing this Pure Cannabis ETF, with real, pure cannabis investment exposure to the public.
AdvisorShares Pure Cannabis ETF (YOLO) Portfolio Manager
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.The Fund is subject to a number of risks that may affect the value of its shares. This section provides additional information about the Fund’s principal risks. The degree to which a risk applies to the Fund varies according to its investment allocation. Each investor should review the complete description of the principal risks before investing in the Fund. As with investing in other securities whose prices increase and decrease in market value, you may lose money by investing in the Fund.
Cannabis-Related Company Risk. 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 (i) significantly affect a cannabis-related company’s ability to secure financing, (ii) impact the market for marijuana industry sales and services, and (iii) set limitations on marijuana use, production, transportation, and storage. Cannabis-related companies may also be required to secure permits and authorizations from government agencies to cultivate or research marijuana. In addition, cannabis-related companies are subject to the risks associated with the greater agricultural industry, including changes to or trends that affect commodity prices, labor costs, weather conditions, and laws and regulations related to environmental protection, health and safety. Cannabis-related companies may also be subject to risks associated with the biotechnology and pharmaceutical industries. These risks include increased government regulation, the use and enforcement of intellectual property rights and patents, technological change and obsolescence, product liability lawsuits, and the risk that research and development may not necessarily lead to commercially successful products.
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.