The AdvisorShares DENT Tactical Advantage ETF (NYSEArca: DENT) will no longer be rolled into another AdvisorShares fund as previously planned, but will instead be liquidated in August, according to a filing the fund firm made with regulators that detailed a decision by the fund’s board of trustees.
DENT, a three-year-old fund-of-funds ETF run by HS Dent Investment Management that costs 1.65 percent a year, has failed to attract investor interest. The fund had just $5.5 million in assets as of July 24, and it has shed more than 15.7 percent in value in the past year.
Still, AdvisorShares was initially reluctant to pull the plug completely, and said in late May that it would reorganize DENT into the AdvisorShares Meidell Tactical Advantage ETF (NYSEArca: MATH). We counted it as a fund closure at the time, and the annual total for closed funds is now 19—on pace to beat the 30 closures in 2011.
MATH is another relatively small actively managed strategy with $6.3 million in assets. On May 23 when AdvisorShares announced the fate of DENT, it said that it believed MATH’s manager, American Wealth Management, would do a better job at providing investment solutions.
But the fund's board of trustees voted to liquidate the fund completely in a move to benefit shareholders because of the amount of time it would take to merge the two funds and the costs that would be associated with that process, AdvisorShares told IndexUniverse. Trading in DENT will stop on Aug. 8, and the fund will be liquidated by Aug. 15, the filing said.
At that time, remaining investors will get a cash distribution equal to the net asset value of their shares, the company said in a notice sent out this week.
DENT’s liquidation comes on the heels of the reorganization of another actively managed AdvisorShares fund in November.
In that instance, AdvisorShares enlisted Accuvest Global Advisors to remake the AdvisorShares Mars Hill Global Relative Value ETF (NYSEArca: GRV) into the AdvisorShares Accuvest Global Long Short ETF (NYSEArca: AGLS).
The decision stemmed from GRV’s poor track record. Between January and November of 2011, GRV lost 16 percent of value. The decline was accompanied by sizeable outflows. At the time GRV was set to become AGLS, the fund’s total assets were a mere $3.2 million, from as high as $38 million at one point.
The new AGLS now has $20.59 million and has posted year-to-date gains of 4.5 percent.
DENT’s Trend-Focused Strategy
DENT is a broadly diversified portfolio that invests in equities and fixed income as it looks for trends in the U.S. and global economies.
Not long after its launch in 2009, IndexUniverse’s Director of Research David Nadig noted the fund’s lackluster performance in a blog, pointing out at the time that since its inception, DENT had fallen 2.8 percent, while the S&P 500 had rallied 6.3 percent.