AdvisorShares rolls out actively managed “buy-write” ETF

Sep 18th, 2012 | By | Category: Alternatives / Multi-Asset

AdvisorShares, a US-based sponsor of actively managed exchange-traded funds (ETFs), has announced the launch of the AdvisorShares STAR Global Buy-Write ETF (VEGA).

AdvisorShares rolls out actively managed “buy-write” ETF

The actively managed AdvisorShares STAR Global Buy-Write ETF (VEGA) is designed to deliver consistent repeatable returns across all market cycles.

The fund, which is sub-advised by Partnervest, a California-based investment advisor, seeks consistent repeatable returns across all market cycles by using a proprietary strategy known as ‘Volatility Enhanced Global Appreciation’.

The sub-adviser employs a “buy-write” (also known as “covered call”) overlay for VEGA’s global allocation strategy using exchange-traded products (ETPs).

The strategy simultaneously writes (sells) an option against each position in order to seek cumulative price appreciation from the portfolio’s global exposure, while generating a consistent income stream from the sale of covered call and/or cash-secured put options, creating less dependence on markets for returns during downturns.  When volatility is low the portfolio manager uses protective put options to manage downside risk.

“In the growing market for actively managed ETFs, we believe VEGA provides a compelling offering that is truly unique to the space,” said Noah Hamman, CEO of AdvisorShares.  “We feel investors and our advisor base will find Partnervest’s Volatility Enhanced Global Appreciation proprietary strategy as an attractive liquid alternative vehicle that aims to generate lower beta and positive alpha, especially in the face of such market uncertainty.  VEGA is a welcomed complement to our broadly diversified stable of actively managed ETFs.”

“We’re excited to partner with AdvisorShares in bringing VEGA to market,” said Ken Hyman, President and Chief Executive Officer of Partnervest.  “If history has taught us anything, it is that a single person or entity cannot consistently predict the markets with any high degree of accuracy.  We feel confident that VEGA may minimize losses on the downside and has the capability to participate in the markets upside, providing investors with an attractive all-weather alternative strategy within a transparent, highly liquid and cost-efficient ETF wrapper.”

Meanwhile James Herrell, CFA, portfolio manager of VEGA, added, “In managing VEGA, we seek to perform in all market conditions by utilising a disciplined process designed to harness the benefits that volatility offers.  These include providing alternative income sources and the ability to repair a portfolio when it needs it most. In doing so, we strive to realise option premium income during volatility while adding protective put options when volatility is low.  We believe investors who become shareholders of VEGA will benefit from our structured target return approach.”

The fund has been listed on the NYSE Arca and comes with a net expense ratio of 2.01%.

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