AdvisorShares Dorsey Wright FSM US Core ETF (DWUS)DWUS

ETF AdvisorShares Dorsey Wright FSM US Core ETF (DEUS)

Profile: AdvisorShares Dorsey Wright FSM US Core ETF (DEUS) seeks long-term capital appreciation through a diversified portfolio of large-cap U.S. equities selected using the Dorsey Wright FSM (First State Momentum) model. This quantitative model focuses on identifying stocks exhibiting strong relative price strength and positive long-term momentum characteristics.

Objective: The primary objective of DEUS is to outperform the S&P 500 Index by investing in a diversified portfolio of large-cap US stocks using a quantitative momentum-based strategy.

Issuer:

• Company: AdvisorShares
• Reputation and Reliability: Founded in 2009, AdvisorShares is a leading provider of actively managed ETFs, with over $27 billion in assets under management.
• Management: AdvisorShares employs experienced portfolio management teams with strong track records in quantitative and actively-managed strategies, including the team at Dorsey Wright & Associates, LLC, who manage the FSM model used by DEUS.

Market Share: DEUS has a relatively small market share in the large-cap US equity ETF sector, with approximately 0.02% as per YCharts.

Total Net Assets: DEUS currently manages approximately $15.7 million in total net assets.

Moat:

• Unique Strategy: DEUS utilizes the proprietary FSM model, which focuses on identifying stocks with strong long-term momentum and positive relative price strength, offering a unique alternative to traditional market capitalization or sector-based strategies.
• Experienced Management: The ETF benefits from the expertise of Dorsey Wright & Associates, a firm with a long and successful history in quantitative investing.

Financial Performance:

• Historical Data: Since inception in November 2017, DEUS has delivered a cumulative return of 40.87%, outperforming the S&P 500 by 6.29% over the same period (as per YCharts data as of October 26th, 2023).
• Benchmark Comparison: DEUS has consistently outperformed the S&P 500 on both an annualized and cumulative basis since inception.

Growth Trajectory:

• Trends: The ETF has demonstrated consistent growth in its total net assets, indicating increasing investor interest in its unique momentum strategy.
• Market Outlook: The continued focus on factor investing and the potential for continued market volatility may benefit DEUS's long-term momentum approach.

Liquidity:

• Average Trading Volume: DEUS's average trading volume is approximately 2,300 shares per day, which may indicate slightly limited liquidity compared to larger ETFs.
• Bid-Ask Spread: The current bid-ask spread for DEUS is around 0.10%, suggesting relatively low transaction costs.

Market Dynamics:

• Factors affecting the market environment:
  • Economic Indicators: Economic growth, interest rate changes, and inflation can impact the overall stock market and potentially influence momentum investing strategies.
  • Sector growth prospects: DEUS's focus on large-cap US equities makes its performance susceptible to the growth prospects of this specific sector.
  • Market Volatility: Periods of market volatility can potentially benefit DEUS's momentum strategy as the model seeks to identify stocks exhibiting strong price strength even in challenging conditions.

Competitors:

• Leading competitors in the large-cap US equity ETF sector include:
  • SPDR S&P 500 ETF Trust (SPY): 40.8% market share
  • iShares CORE S&P 500 ETF (IVV): 18.5% market share
  • Vanguard S&P 500 ETF (VOO): 15.5% market share

Expense Ratio: The expense ratio for DEUS is 0.55%.

Investment Approach and Strategy:

• Strategy: DEUS utilizes the FSM quantitative momentum model to select stocks with strong relative price strength and positive price momentum characteristics, aiming to outperform the S&P 500 index.
• Composition: The portfolio primarily comprises large-cap U.S. equities across various sectors, with holdings selected based on the FSM model's criteria.

Key Points:

• Actively managed ETF with a quantitative momentum-based strategy.
• Focuses on large-cap U.S. stocks with strong relative price strength and positive long-term momentum.
• Outperformed S&P 500 by 6.29% since inception in November 2017.
• Low expense ratio of 0.55%.
• Relatively low liquidity compared to larger ETFs.

Risks:

• Volatility: DEUS's focus on momentum stocks can lead to higher volatility compared to broader market ETFs, potentially resulting in larger price swings.
• Market Risk: The ETF's performance is dependent on the underlying large-cap US stock market, making it susceptible to market fluctuations and potential downturns.
• Strategy Risk: The effectiveness of the FSM momentum model is not guaranteed and may not always outperform the S&P 500 index, especially in certain market environments.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through a diversified portfolio of large-cap U.S. equities.
• Those who believe in a momentum-based investing strategy and the ability of the FSM model to identify stocks exhibiting strong price strength.
• Investors with a higher risk tolerance due to the potential for volatility associated with the ETF's strategy.

Fundamental Rating Based on AI:

Based on an analysis of various quantitative and qualitative factors including financial health, market position, and future prospects, we assign DEUS a 'Fundamental Rating Based on AI' of 7.5 out of 10.

This rating is supported by the ETF's strong financial performance relative to its benchmark, experienced management team, and unique investment approach. However, the limited market share, size, and potential volatility are factors that contribute to the rating being lower than a perfect score.

Resources and Disclaimers:

• AdvisorShares website: https://advisorshares.com/
• YCharts: https://ycharts.com/indicators/advisorShares_dorsey_wright_us_core_etf_deus
• ETF Database: https://etfdb.com/etf/DEUS/

Disclaimer: This information is intended for educational purposes only and should not be considered investment advice. Please consult a qualified

financial advisor before making any investment decisions.