AdvisorShares Rolls Out International Bear ETF (HDGI)

by on July 19, 2013 | ETFs Mentioned:

The bull run continues on Wall Street as largely upbeat corporate earnings reports are offering little reasons to sell now. Amid the ongoing wave of optimism permeating the equity market, AdvisorShares is rolling out a one-of-a-kind product that should catch the attention of anyone wary of the market’ steep run-up thus far on the year. The new actively-managed Athena International Bear ETF (HDGI) began trading today and is the counterpart to the already successful Active Bear ETF (HDGE, C) which debuted at the start of 2011 [see How To Be A Better Bear: Short Selling vs. Inverse ETFs?].

Be Bearish, Globally

As its name suggests, HDGI is a short international equity fund that is constructed similarly to its predecessor HDGE. The portfolio management team, led by Dr. Thomas Howard, PhD, utilizes a behavioral factor driven investment process that measures manager behavior, strategy consistency and conviction, and identifies which stocks are held in top and bottom relative weight positions within the equity universe; short positions are then chosen from the lowest conviction holdings within the international universe.

HDGI’s portfolio can range from 50 to 100 holdings, comprised of American Depository Receipts (ADRs) and international company stocks traded on U.S. exchanges. The methodology behind HDGI is deeply rooted in over 35 years of academic research and statistical validation, and as such, it offers a compelling opportunity to tap into a unique strategy that has historically been out-of-reach for the average self-directed investor [see our Greedy When Others Are Fearful ETFdb Portfolio].

The new fund maintains flexibility to invest in other ETFs as well as ETNs to achieve its objective of delivering short exposure to intentional equities. HDGI will have its net expense ratio capped at 1.50% for at least the first year of trading; while this cost is quite high, it does fall in-line with HDGE’s current price tag of 1.85%.

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Disclosure: No positions at time of writing.