AdvisorShares’ GRV To Get A Makeover

November 22, 2011

Poor performance leads AdvisorShares to retool its relative value ETF, GRV.


AdvisorShares, the Bethesda, Md.-based fund provider known for its actively managed ETFs, enlisted Accuvest Global Advisors to make over its Mars Hill Global Relative Value ETF (NYSEArca: GRV) as it tries to revive an ETF that has failed to perform. GRV will also get a new name and a new ticker symbol, effective Dec. 1.

GRV will be called the Accuvest Global Long Short ETF, and trade on the NYSE Arca board under the new ticker “AGLS.” The fund has the distinction of being the U.S. market’s first long/short ETF, a strategy that was only known in the mutual fund space.

The fund came to market in July 2010 full of promise, as investors poured $38 million into it in its first month, signaling they were open to long/short strategies at a time of market volatility.

But with year-to-date net asset value losses of 16 percent, significantly lagging its long-only benchmark, GRV now has only $3.2 million in assets, which led AdvisorShares to cut Mars Hill Partners loose, and put Walnut Creek, Calif.-based Accuvest on the subadvisory job instead.

“While other hedge fund strategies have struggled this year, this was designed to be an ‘all weather’ strategy that should still be able to find gains in both up and down markets,” AdvisorShares’ CEO Noah Hamman told IndexUniverse in an interview.

“This change will bring an expert in global asset management to a product that has fallen short in performance relative to its peers,” he said.

The New GRV

The fund is designed to outperform the MSCI World Index with an all-capitalization global exposure that protects investors from downside volatility while capitalizing on the relative spread between the two positions.

Under Accuvest, the fund will keep its strategy and index, but the methodology and investment strategy will change, Hamman said.

“The investment strategy will be more country focused on the long and short positions versus the old strategy, which invested in equities at a country, size and sector level,” he said.

Accuvest’s managing director David Garff spoke with IndexUniverse earlier this year about his firm’s asset-allocation strategies using single-country ETFs.

“Accuvest’s proprietary model methodology seeks to identify countries that are targeted to outperform global indices and underperforming countries that can be shorted, which will provide a hedging solution that may provide lower correlation and lower volatility than traditional long-only strategies,” Hamman said in a press release.

The fund is a direct competitor to mutual funds with similar strategies, but in the ETF space, its closest relative is the ProShares RAFI Long/Short ETF (NYSEArca: RALS), which came to market on the heels of GRV’s launch, and has gathered $26 million since December despite NAV losses of 7.3 percent year-to-date.

RALS isn’t global in scope. It relies on Rob Arnott’s Research Affiliates indexing model, and focuses on the U.S. market. But the RAFI fund, which has a lower annual expense ratio of 0.95 percent compared with 1.49 percent for the AdvisorShares strategy, suggests the market has an appetite for volatility-focused strategies.

AGLS will be the first of two collaborations between the two companies.

Accuvest will also subadvise AdvisorShares’ long-only Accuvest Global Opportunities ETF (NYSEArca: ACCU), which has not been launched yet, AdvisorShares said in the press release.




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