AdvisorShares has launched two new actively managed ETFs – one equity, one multi-asset – which utilize quantitative analysis to determine asset allocations and manage risk.
Noah Hamman, Chief Executive Officer of AdvisorShares.
The funds, which have listed on NYSE Arca, are the AdvisorShares Q Dynamic Growth ETF (QPX US) and the AdvisorShares Q Portfolio Blended Allocation ETF (QPT US).
The ETFs are sub-advised by ThinkBetter, a Florida-based investment advisory, which deploys its proprietary ‘Q Methodology’ to guide portfolio design and risk management.
The Q Methodology approach generates tens of thousands of portfolio simulations in a bid to optimize an asset allocation for a given level of risk. It is based on heavy-tail distribution analysis that estimates the expected drawdown of a portfolio under extreme but plausible scenarios.
Ron Piccinini, Chief Investment Officer of ThinkBetter, said, “Risk management resides at the core of our investment ethos. We believe our proprietary Q Methodology provides ‘better math’ in navigating portfolio management risk and potential returns which ultimately aims to align better investment outcomes for educated advisors and investors.”
Noah Hamman, Chief Executive Officer of AdvisorShares, added, “We’re excited to showcase ThinkBetter’s collective industry experience and established portfolio management expertise in our active ETF suite. We believe advisors and investors who conduct due diligence on these alpha-seeking investment solutions will find them as compelling considerations among their respective investment peer groups.”
Dynamic Growth
The AdvisorShares Q Dynamic Growth ETF seeks long-term growth by primarily investing in other equity ETFs across size, style, and sector varieties to deliver returns similar to the broad market.
The portfolio is optimized monthly and may include lesser allocations to fixed income ETFs or gold to manage risk.
During periods of abnormal volatility, the fund can tactically allocate to a more defensive portfolio consisting of short-term Treasury ETFs. Risk management is driven by a proprietary market volatility indicator, the Q Implied Volatility Index, which is reviewed daily.
Blended Allocation
The AdvisorShares Q Portfolio Blended Allocation ETF, meanwhile, also uses ETFs to invest across several asset classes including geographical and sector equities, government, municipal, and corporate fixed income, real estate, gold, and other commodities.
The asset allocation is optimized on a monthly basis by seeking the highest possible return while calibrating to the expected drawdown of a typical balanced fund.