AdvisorShares Plans Tactical ETF, Details SiM Active ETFs

Includes: DGRO, DINC, MATH
by: Shishir Nigam

On Dec 30th, 2010, AdvisorShares filed a preliminary prospectus for a new actively-managed ETF – the AdvisorShares Tactical ETF (NYSEARCA:MATH). The proposed Active ETF will look to achieve capital appreciation with a secondary emphasis on capital appreciation. MATH will be a fund-of-funds, much like several of AdvisorShares’ existing actively-managed ETFs. It will invest in ETFs that will provide exposure to domestic and foreign equities, fixed-income and commodity markets.

The sub-advisor to the fund has not been disclosed and neither has the expense structure. The manager will run a long-only tactical strategy that will rotate out of higher volatility assets when the advisor believes there are risks in equity markets. The fund has the flexibility to be 100% allocated to fixed-income or cash. The managers will use a “quantitative tactical methodology” to identify and participate in long-term “durable trends” in the markets. While utilizing ETFs in the portfolio, MATH will avoid leverage and inverse ETFs.

As with all actively-managed ETFs in the US, the fund will provide daily disclosure on all portfolio holdings on the fund’s website, with a 1-day lag.

AdvisorShares also filed an updated prospectus for the SiM Dynamic Allocation Diversified Income ETF (Pending:DINC) and the SiM Dynamic Allocation Growth Income ETF (NYSEARCA:DGRO). Both funds will have a net expense ratio of 1.40%, after a fee waiver of 9 basis points that is effective until December 27, 2011. AdvisorShares had filed for these two funds in October 2010.

Both of these Active ETFs are also fund-of-funds and will invest in other ETFs to obtain the desired exposures. Strategic Income Management LLC (SiM) is a Seattle-based investment advisor that adheres to value-driven and income-focused asset allocation. SiM had $11 million in assets under management as of December 2010. The lead portfolio manager for both DINC and DGRO will be Randall Yoakum, CEO of Strategic Income Management.

The addition of MATH to the product development pipeline means that AdvisorShares now has seven actively-managed ETFs that are in the works. AdvisorShares already has five actively-managed ETFs live on the market, which includes the largest actively-managed equity ETF in the US – the Cambria Global Tactical ETF (NYSEARCA:GTAA). Slowly and steadily, AdvisorShares is starting to gain recognition as well as investor assets within the actively-managed ETF space. Several of the company’s launches have taken off and its strong product pipeline and partnerships should bode well for AdvisorShares’ prospects going forward.

Disclosure: No positions in above-mentioned names.

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