Bearish days in the market, which are far and few in between these days, remind us of Actively Managed “Bear” ETFs in the marketplace that tend to shine during such periods.
We have profiled HDGE (AdvisorShares Ranger Equity Bear, Expense Ratio 1.75%, $176 million in AUM) in the past in this column, with the fund having debuted back in early 2011, and the ETF is substantially off of its early 2016 highs where we see it trading at high as $13.19 (it has a $9 handle currently).
Year-to-date, HDGE has seen modest inflows of about $17 million, and has noticeably experienced a run here since late April. It traded at a 52-week low of $8.59 seventeen trading sessions ago, but has bounced more than 6% since to present levels.
HDGE is a short-sale oriented equity only strategy, not employing futures in order to be bearish on the market, and fund literature states the following:
“The Portfolio Manager implements a bottom-up, fundamental, research driven security selection process. In selecting short positions, the Fund seeks to identify securities with low earnings quality or aggressive accounting which may be intended on the part of company management to mask operational deterioration and bolster the reported earnings per share over a short time period. In addition, the Portfolio Manager seeks to identify earnings driven events that may act as a catalyst to the price decline of a security, such as downwards earnings revisions or reduced forward guidance.”
Presently the fund has a heavy cash component and its top “short equity” positions are in the following names: 1) DDR, 2) CBL, 3) MDSO, 4) AYI, and 5) DATA. Note that DDR has really tumbled lately, trading at a new 52-week low today as are CBL and AYI.
HDGE is the largest “non-index” equity ETF classified in the “Inverse Equity” space behind such funds like “Bear” ETFs from ProShares that are meant largely for aggressive trading and/or hedging, because the funds are designed to deliver the daily inverse return of a benchmark index, i.e. SH (ProShares Short S&P 500, Expense Ratio 0.89%, $1.9 billion in AUM), RWM (ProShares Short Russell 2000, Expense Ratio 0.95%, $342 million in AUM), PSQ (ProShares Short QQQ, Expense Ratio 0.95%, $269 million in AUM), and DOG (ProShares Short Dow 30, Expense Ratio 0.95%, $258 million in AUM).
The AdvisorShares Ranger Equity Bear ETF (NYSE:HDGE) was trading at $9.10 per share on Wednesday afternoon, up $0.12 (+1.34%). Year-to-date, HDGE has declined -1.62%, versus a 6.24% rise in the benchmark S&P 500 index during the same period.
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.
Paul 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.