The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  AdvisorShares Insider Advantage ETF to a Morningstar Medalist Rating of Negative.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy's portfolio management team completely turned over less than two years ago, raising concerns. This, along with other weaknesses, drives the strategy's Below Average People Pillar. The strategy gets an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization still has a way to go to reach the industry standard, evidenced by a bench of portfolio managers with limited tenure and high portfolio manager turnover. As a result, the firm obtains a Low Parent Pillar rating.

Analyst Rating

American Express

Encore Wire

Vistra Energy

eBay

Murphy USA

Liberty Oilfield Services

Eagle Materials

Cigna

Nucor

MGIC Investment

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. AdvisorShares Insider Advantage ETF earns an Average Process Pillar rating. 

The largest contributor to the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category average, which suggests that the managers have shown skill in their allocation of risk. Management team experience, which averages 22 years at this fund, also supports the process. Lastly, the process is limited by the instability of talent across its parent firm. The firm's asset-weighted manager tenure of four years suggests it could do more to retain portfolio managers.

 This strategy tends to hold smaller, more growth-oriented companies than its average peer in the Large Value Morningstar Category. Looking at additional factor exposure, the fund has held stocks with higher trading volumes compared to Morningstar Category Peers in the past few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. This orientation tends to pay off most prominently when markets are hot. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, this strategy has taken on exposure to high-momentum stocks in these years. Momentum approaches bet that rising stocks will continue to rise and that lagging stocks will continue to lag. In this month, the strategy also had more exposure to the Momentum factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in consumer cyclical and basic materials relative to the category average by 8.5 and 8.3 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and financial services, underweight the average by 7.1 and 5.7 percentage points of assets, respectively. The portfolio is positioned across 102 holdings and is less top-heavy than peers. Specifically, 12.0% of the portfolio's assets are concentrated within the top 10 fund holdings, compared to the category’s 27.4% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 278% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

The fund earns a Below Average People Pillar rating. This strategy has seen its entire listed management team change within the past three years. Even though this strategy dates back to October 2011, it's difficult to analyze the new team until they spend more time on the strategy.

Below Average

People

AdvisorShares fails to meet industry-standard stewardship qualities, culminating in a Low Parent Pillar rating. A notable weakness of AdvisorShares is the inexperience of its longest-tenured managers compared with other asset managers. Managing capital through a full market cycle is a challenging prospect for seasoned managers, but with only about four years of average asset-weighted tenure, there's cause for concern. A detractor from the firm's rating is its lower-than-average portfolio management retention over the past five years, as elevated turnover bears watching. The firm's risk-adjusted performance compares similarly to competitors. Across all open-end and exchange-traded funds, the firm's average five-year Morningstar Rating is 3.5 stars, which is about standard.

Parent

AdvisorShares Insider Advantage ETF

SURE is an actively managed portfolio of US stocks selected using a proprietary model that follows insider buying and stock buyback strategies.

Qubed Capital founder Minyi Chen had managed the first version of the fund up until 2016.

AdvisorShares' SURE Lands With Former Manager

AdvisorShares DoubleLine Value Equity ETF

BETHESDA, Md. , Aug. 31, 2022 /PRNewswire/ -- AdvisorShares, a leading sponsor of actively managed ETFs, announced today that it will assume portfolio manager responsibilities of the AdvisorShares DoubleLine Value Equity ETF (NYSE Arca: DBLV) on September 1, 2022.

News for AdvisorShares Insider Advantage ETF ETF (SURE)