AdvisorShares, the US-based firm behind a string of active ETFs, has announced that the AdvisorShares Rockledge SectorSAM ETF (SSAM) will commence trading on Thursday, January 12, 2012.
AdvisorShares launches actively-managed long/short sector rotation strategy ETF.
Managed by New York-based Rockledge Advisors, SSAM seeks to generate stable and consistent returns under all market conditions by utilising both long and short positions in US Sector ETFs that correspond to the US large capitalisation sectors.
In almost any year or market cycle, there is a significant difference in the performance between the top performing sector and the bottom performing sector. This strategy is designed to invest in the top performing sectors, while hedging by short selling the sectors expected to have the lowest or negative returns.
To do this, Rockledge will use a proprietary quantitative analytical system known as the Sector Scoring and Allocation Methodology (“SectorSAM”) which helps Rockledge determine specific conditions in both economic and business cycles.
Rockledge evaluates whether a sector is cheap or expensive, given the cycle relative to the rest of the market and will invest (be long) in the undervalued sectors while avoiding (be short) the overvalued sectors.
Alex Gurvich, Co-Founder of Rockledge and portfolio manager of SSAM, said: “the US economy goes through various growth cycles, which means there should be relative sector variation at all times. We rotate investments between the US economic sectors based on our proprietary evaluation in order to try and outperform the overall market. We believe that the prudent investor, who understands the risk vs. reward trade-off, should be looking at sector investing vs. individual stocks. Holding a position in a sector can provide inherent diversification while reducing individual company risk.”
Commenting on the announcement, Noah Hamman, CEO and Founder of AdvisorShares, said “we are very excited to be launching SSAM with Alex Gurvich’s team from Rockledge. Financial advisors and investors are seeking more active and hedging strategies to add to their investment portfolio. The ability to add a new alternative manager in a transparent, cost-effective actively-managed ETF structure will be a compelling offering to both advisors and their clients.”
Alternative sector-rotation ETFs include:
Guggenheim/Zacks Sector Rotation ETF (US)
Seeks to overweight those sectors that have attractive risk/return characteristics and the potential to outperform the S&P 500 Index, and other benchmark indices, over time, on a risk-adjusted basis. Based on the Zacks Sector Rotation Index.
Horizons AlphaPro Seasonal Rotation ETF (Can)
Seeks long-term capital appreciation in all market cycles by tactically rotating its exposure amongst equities, fixed income, commodities and currencies, T-bills or cash during periods that have historically demonstrated seasonal trends. Based on a proprietary, seasonal-rotation investment strategy developed by research analysts Don Vialoux and Brooke Thackray.