AdvisorShares launched two new exchange-traded funds on Wednesday based on strategies from Nasdaq Dorsey Wright—one is for bullish investors, the other is for those who aren’t.
The AdvisorShares Dorsey Wright Micro Cap ETF (DWMC) goes long on a portfolio of roughly 150 micro-cap companies that have the best relative strength characteristics as measured by Dorsey Wright’s proprietary stock rotation model. Dorsey Wright & Associates, an RIA that built its reputation on the back of its relative strength strategies, was purchased by Nasdaq in 2015.
According to fund literature, Nasdaq Dorsey Wright’s relative strength investing process is a rules-based system that buys securities that have appreciated in price more than other equities within its investment universe and holds them until they exhibit sell signals. No company fundamental data is involved in the analysis, and stock selection is strictly based on the highest-ranked securities as measured by the relative strength investment process. Conversely, the selling process is also based on the technical, systematic ranking system.
Regarding DWMC, it holds companies with market caps of less than $1 billion and which have sufficient liquidity. AdvisorShares says it sees this fund being used as a complementary or satellite equity holding within a broad-based equity allocation.
The AdvisorShares Dorsey Wright Short ETF (DWSH) seeks capital appreciation through short selling. Specifically, this fund will typically hold 75 to 100 positions, and will short those securities with the highest relative weakness within its universe consisting mainly of U.S. large-cap stocks and ETFs.
AdvisorShares says this fund can be used as part of a long/short strategy to hedge long positions within the U.S. large-cap sleeve of an investment portfolio. The goal is to provide alpha, particularly in bear markets.
Both funds are managed by John Lewis, a senior portfolio manager with Nasdaq Dorsey Wright. And both have a net expense ratio of 0.99 percent.