AdvisorShares, the Bethesda, Maryland-based firm that burst on to the ETF scene last year with a fund linked to the investing theories furthered by Harry Dent, continues to expand its presence in the active ETF space. The latest ETF from the firm is the WCM/BNY Mellon Focused Growth ADR ETF (AADR), a fund that seeks long-term capital appreciation above international benchmarks such as the MSCI EAFE Index and the BNY Mellon Classic ADR Index.
AADR will offer investors exposure to a large-cap growth portfolio consisting of non-U.S. stocks. The fund’s assets will generally be concentrated in between 20 and 30 individual securities, with a focus on traditional growth sectors such as technology, health care, and consumer goods/services. At its launch, AADR’s largest holdings consisted of Chinese search engine firm Baidu (5.9%), Walmart de Mexico (5.7%), consumer goods retailer Li & Fung (5.7%), and Israeli drug manufacturer Teva Pharmaceutical (5.1%).
AADR may have appeal as a complementary holding to some of the more popular ETFs offering ex-U.S. exposure. EFA, which tracks the MSCI EAFE Index, maintains significant sector weightings in financials (24%), industrial materials (16%), and energy (7%). Because most ex-U.S. funds are linked to cap-weighted indexes, they tend to have big holdings in banks and oil firms (which tend to be the largest publicly traded companies) and therefore a value bias. AADR will focus primarily on growth companies, potentially offering exposure not sufficiently represented by the most popular international equity ETFs.
AADR will be the first actively-managed ETF to focus primarily on ex-U.S. equities. Grail currently offers a lineup of several active ETFs focusing on various corners of the U.S. market, while other AdvisorShares funds maintain a mix of domestic and international exposure [use the ETF Screener to see a complete list of active ETFs on the market].
AADR will be unique from existing AdvisorShares active ETFs in that its underlying holdings will consist of individual stocks; both DENT and GRV operate as “ETFs of ETFs,” pursuing their respective strategies through positions in other exchange-traded funds. According to the issuer Web site, AADR will target a 15% annual turnover rate, with a 3-5 year nominal holding period. The fund maintains a gross expense ratio of 1.27%, although the advisor has agreed to cap expenses at 1.25% until at least May 2011.
Next up for AdvisorShares looks to be the Peritus High Yield ETF (HYLD), a fund that will invest in high yield debt securities. No launch date for that fund has been set.
Disclosure: No positions at time of writing.