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(DWMC) Dorsey Wright Micro Cap ETF

Overview

How the Dorsey Wright Micro Cap ETF Works

    Micro-cap equities, the smallest companies in the marketplace, possess substantial upside potential but can remain subject to several investing inefficiencies – including lack of public research, trading illiquidity, and volatility – which can necessitate the need for an experienced portfolio manager when investing in this compelling area of the equity market. The AdvisorShares Dorsey Wright Micro Cap ETF (Ticker: DWMC) is an actively managed ETF that seeks long-term capital appreciation by investing in exchange-listed, micro-cap equities with sufficient liquidity that generally have a market capitalization of less than $1 billion.
    DWMC’s investment strategy follows Nasdaq Dorsey Wright's core philosophy of relative strength investing – a proprietary systematically-driven methodology that buys securities that have appreciated in price more than other equities within its investment universe and holding those securities until they exhibit sell signals. No company fundamental data is involved in the analysis and the systematic nature of Dorsey Wright’s process removes emotion from the day-to-day decision making. Stock selection is strictly based on the highest ranked securities as measured by the relative strength investment process.
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DWMC Fund Flash

DWMC Investor Presentation

Fund Documents

Portfolio Manager Commentaries

Performance -Month-End

DWMC Performance History (%) as of 10/31/2018
 NAVMarket Price ReturnRussell Microcap
1 Month-11.33-11.46-10.90
3 Month-7.84-7.74-10.10
Since Inception
(7/10/2018)
-12.29-12.20-12.60

Performance -Quarter-End

DWMC Performance History (%) as of 9/30/2018
 NAVMarket Price ReturnRussell Microcap
1 Month-4.77-4.69-3.26
Since Inception
(7/10/2018)
-1.08-0.84-1.90

Performance data quoted represents past performance and is no guarantee of future results. All Fund data and performance data quoted is believed to be accurate, and unless otherwise stated, is sourced from the Fund administrator, the Advisor’s or Sub-Advisor’s proprietary data, and Morningstar. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. Returns less than one year are not annualized.

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Why Invest in DWMC?

  • Alpha-Seeking Micro-Cap Exposure - Research on micro-cap companies is often scarce, which can present an ideal opportunity for alpha generation. DWMC’s portfolio manager seeks to add alpha by implementing Dorsey Wright’s historically successful relative strength process that seeks to identify the strongest companies while eliminating the weakest performers.
  • Historical Upside Potential - It is often easier for smaller companies to grow than larger companies. The micro-cap universe has historically delivered superior long-term performance over larger-cap companies.
  • Manager Diversification - Through an established portfolio manager, spreading your investment risk among equities not correlated to the broader market can help diversify and mitigate your overall portfolio risk.
  • Strategy Diversification - The systematic portfolio management process takes several factors into account to limit unnecessary risk and maximize exposure to the momentum factor. If a security becomes too large as a percentage of the portfolio it is trimmed to bring it back in line with the other security weights. The process seeks to spread out allocations within its stock model. The objective sell discipline represents an important component of the portfolio construction process.
  • Active Management Advantage - Most micro-cap ETFs passively invest owning the majority of the stocks represented in their benchmark index, including those with less than attractive investing attributes. DWMC’s portfolio manager systematically screens micro-cap stocks for inclusion and removal from its highly selective, active portfolio.

Where Does DWMC Fit in a Traditional Portfolio?

  • DWMC may provide a high-growth complement or satellite equity holding to a broad-based equity allocation. This ETF can be used to diversify a U.S. stock allocation and to seek long-term growth in your portfolio.

Key Attributes

  • High Conviction Portfolio of Top-Ranked Micro-Caps - DWMC holds a portfolio of approximately 150 exchange-listed, micro-cap equities that demonstrate the most favorable relative strength characteristics according to Dorsey Wright’s proprietary stock rotation model. If a company’s ranking deteriorates, it is replaced in the portfolio with another company with a stronger ranking.
  • Tomorrow’s Potential Leaders - Some of the largest companies in the world started out as micro-cap companies. DWMC seeks to capitalize on the smallest-sized companies as they are potentially entering their greatest periods of growth. Micro-cap companies may also benefit from merger and acquisition activity.
  • Systematic Approach - DWMC’s investment process is entirely systematic and designed to remove human emotion from the decision process. This approach allows the portfolio manager to continually execute their proven proprietary investment process through all types of different market conditions. The process also allows the portfolio manager the ability to analyze a large number of securities that may become very different over time.
  • Relative Strength Analysis - DWMC uses relative strength which compares price performance within a universe of stocks. Relative strength investing provides a repeatable process to identify and select the leaders while avoiding the laggards. It is important to be equally good at identifying both long-term winners and losers.
  • Disciplined Sell Process - Securities are automatically sold from the portfolio when they fall below a predetermined rank threshold. The sell rank is determined when the security is purchased and is not adjusted for different market scenarios. The sell process is entirely based on the technical, systematic ranking system and does not allow for any portfolio manager discretion or overrides.

About the Portfolio Manager

    John G. Lewis, CMT, Senior Portfolio Manager
    John Lewis is a Senior Portfolio manager with Nasdaq Dorsey Wright. In this role, Mr. Lewis is responsible for the investment strategies used in various different indices and models.
    Since joining the firm in 2002, Mr. Lewis has developed strategies for the firm’s Systematic Relative Strength series of separate accounts, the Technical Leaders Index methodology, global asset allocation strategies, and multiple series of UITs. His work is technically driven and focuses on relative strength and momentum as the main factors in the investment process.
    One of the foremost experts on relative strength investing, Mr. Lewis has authored several original research papers on the subject. He is a Chartered Market Technician (CMT) and a member of the Market Technician’s Association and the American Association of Professional Technical Analysts. Mr. Lewis earned an M.B.A. in Finance from the University of Southern California and a B.A. from the University of San Diego.
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Manager Minutes, September 2018

Price History

As of: 11/12/2018
NAV$21.46Closing Price$21.60
Change$-0.56Change$0.00
Shares Outstanding125,000Volume461
4PM Bid/Offer Midpoint$21.62Premium/Discount$0.16
Assets Under Management$2,682,666.69
Premium/Discount Historical Data

 

Fund Basics

  • Symbol

    DWMC

  • Exchange

    NASDAQ

  • Inception Date

    7/10/2018

  • CUSIP

    00768Y537

  • Indicative Value

    DWMC.IV

  • Options

    No

Fees & Expenses

  • Management Fee

    0.75%

  • Other Expenses

    0.37%

  • Gross Expense Ratio

    1.12%

  • Fee Waiver and/or Expense Reimbursement

    -0.13%

  • Net Expense Ratio

    0.99%*

  • *The Advisor has contractually agreed to reduce its fees and/or reimburse expenses to keep net expenses from exceeding 0.99% of the Fund’s average daily net assets for at least one year from the date of the Prospectus.