AdvisorShares, the Bethesda, Md.-based firm known for its active management strategies, filed paperwork with the Securities and Exchange Commission indicating that it is close to launching a fund-of-funds that combines a portfolio of exchange-traded ETPs with call options.
AdvisorShares revealed for the first time that the STAR Global Buy-Write ETF (NYSEArca: VEGA) will have a total net annual expense ratio of 2.01 percent. Revelations of fund price and ticker symbols often mean the launch of a given ETF is nearing, if not imminent.
The fund intends to invest primarily in ETFs and exchange-traded notes that seek to track a diversified basket of global indexes and investment sectors. The fund will use a proprietary strategy known as the Volatility Enhanced Global Appreciation (VEGA), which was created by California-based Partnervest Advisors.
Although VEGA isn’t the first fund to utilize a buy-write strategy, it’s the only actively managed fund that does so globally. Invesco PowerShares offers a buy-write strategy ETF, the PowerShares S&P 500 BuyWrite Portfolio (NYSEArca: PBP); however, PBP is passively managed, and tracks an index that applies the buy-write strategy to the S&P 500.
VEGA will hold a long position in shares of its underlying ETFs, and write a call option on that same asset with the goal of realizing additional income from the option premium, the company said in the filing. The methodology is designed to generate quarterly returns.
VEGA’s portfolio will include ETPs across various sectors, which will be selected based on size, track record, diversification, correlation of an underlying index to other indexes as well as on the ability to write covered call options on that given ETP, the filing said.