AdvisorShares, Rockledge Draft Sector ETF

April 12, 2011

 

AdvisorShares, the Bethesda, Md.-based firm known for its actively managed exchange-traded funds, filed paperwork with U.S. regulators to market a fund-of-funds ETF designed to generate returns in a higher-interest-rate environment.

The Rockledge SectorSAM ETF (NYSEArca: SSAM) will invest solely in other ETFs targeting specific U.S. large-capitalization sectors. The fund will hold long positions in ETFs that tap into what the company sees as the most promising sectors, and short those sector ETFs it deems least prospective.

To manage risk, especially when equity markets are falling, the company will strive to have the portfolio be dollar neutral, with the dollar value of long positions being equal to that of short ones. It will also assess relative sector exposure, volatility and sector correlations as ways to keep risk under control, according to the filing.

Rockledge Advisors, which subadvises the fund, will use a proprietary quantitative analysis to forecast each U.S. sector’s excess return within a specific time frame in what the company calls a “Sector Scoring and Allocation Methodology,” the filing said.

The strategy screens for sectors that are expected to outperform the broad stock market as measured by the S&P 500 Index.

Rockledge Advisors is a subsidiary of Conn.-based investment advisory firm Rockledge Group, which is known for its expertise in sector investing.

AdvisorShares already markets six active ETFs, including the Dent Tactical ETF (NYSEArca: DENT) as well as global tactical and fixed-income funds.

It had a total of $263.6 million under management as of April 11, according to data compiled by IndexUniverse.

 

 

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