AdvisorShares, an exchange traded fund sponsor known for its actively managed investment strategies, is launching a bearish ETF that will bet against international stocks. The fund will be subadvised by a firm that incorporates behavioral research, a growing field of investing.
According to a press release, the AdvisorShares Athena International Bear ETF (HDGI) will begin trading Friday, July 19. The fund tries to generate capital appreciation through short sales of international equities and will be managed by AthenaInvest Advisors, who specialize in a behavioral finance approach to identifying securities to short. HDGI has a 2.0% expense ratio.
It will be AdvisorShares' 18th active ETF.
C. Thomas Howard, Ph.D., Chief Executive Officer, Chief Investment Officer and Director of Research at AthenaInvest Advisors, will manage the portfolio.
AdvisorShares also offers a bearish ETF for U.S. stocks - the AdvisorShares Ranger Equity Bear ETF (HDGE), which is subadvised by Ranger Alternative Management and selects short positions based on fundamentals, such as low earnings or aggressive accounting.
The new AdvisorShares Athena International Bear ETF, meanwhile, will screen stocks based on manager behavior, strategy consistency, and conviction, while identifying stocks that are held in the top and bottom relative weight positions within the international stock universe - the stocks with the lowest conviction holdings are shorted.
"These unique behavioral indicators can be predictive of performance and have a persistent spread between the highest and lowest rated investments," according to AdvisorShares.
The portfolio consists from 50 to 100 holdings and invests in American Depositary Receipts (ADRs) and international company stocks.
"With the launch of the first international all-short actively managed ETF, we feel that investors and financial advisors in search of portfolio diversification will find HDGI an important investment option not historically available via a transparent, liquid and efficient active ETF structure," Noah Hamman, Chief Executive Officer of AdvisorShares, said in the press release.
According to AdvisorShares, HDGI could be used in a long/short strategy by pairing the fund with an international long position. Since the ETF has a negative correlation to diversified international stocks, it could also diminish a portfolio's overall volatility.
"With our scalable and holistic process, we aim to provide shareholders with a compelling alternative to other short and inverse products," Dr. Howard said in the press release. "Partnering with AdvisorShares allows us to deliver a unique strategy, providing benefits historically associated with alternative and hedge fund strategies, but delivered in a portable, liquid and transparent active ETF."
Max Chen contributed to this article.