A Deeper Look Inside an Actively Managed Fixed Income Fund

advisorshares-logoToday, we take a closer look at a little-known income-focused actively managed fund that could be of interest to some investors, the AdvisorShares Sage Core Reserves ETF (NYSE:HOLD).

The fund, which sports a reasonable expense ratio of 0.35%, debuted back in January of 2014. Since then, HOLD has managed to raise about $94.5 million in assets.

Although average daily trading volume remains quite low at 5,800 shares, we do see periodic swells, indicating that institutions sometimes make large allocations to the fund. One such instance occurred back in early May, where nearly 750,000 shares changed hands.

According to fund literature:

“HOLD seeks to preserve capital while maximizing income. HOLD seeks to achieve its investment objective by investing in a broad range of fixed-income securities, U.S. dollar-denominated investment grade debt securities, including mortgage-or asset-backed securities rated Baa- or higher. The average duration of the Fund will vary on the forecast for interest rates and will normally not exceed one year. HOLD is managed by Sage Advisory Services. The Sage fixed-income process is based upon implementing a top-down approach focused on actively managing portfolio duration risk, yield curve positioning, market segment allocation, and security selection.”

Outside of this partnership with AdvisorShares in actively managing HOLD, Sage Advisory Services is well known in the ETF space, and has been for many years. The seasoned firm is based in Austin, TX, and its website indicates the offering of several managed ETF strategies in presumably SMA form, including “Core Plus Fixed Income,” “All Cap Equity Plus,” “Conservative Strategy,” “Moderate Strategy,” “Moderate Growth Strategy,” “Growth Strategy,” “Multi Asset Income Strategy,” “Tax Aware Multi Asset Income Strategy,” and “Sustainable Investing ETF Strategy.”

Back to the actively managed ETF HOLD, when we examine portfolio exposure within the product, we see the lion’s share of the holdings presently in “Cash & Equivalents” at about 46% of the fund, followed by roughly 24% exposure to Asset-Backed securities. There are also lesser exposures to Corporate Bonds (16%), Commercial Mortgage-Backed securities (6%), Agency Mortgage-Backed securities (3%), and Non-Agency Residential Mortgage-Backed securities (3%).

HOLD-2016-09-27

HOLD shares were mostly flat in Tuesday afternoon trading at $99.46. Year-to-date, HOLD has gained 1.18%.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.