We profiled AdvisorShares Active Bear ETF (NYSEArca: HDGE) last year on several occasions, as the market environment was ridden with much volatility amid the bearish wave of selling that began last August created much interest in the product.
With the first quarter of 2012 drawing to a close with a very bullish looking outlook for U.S. equities and very low levels of volatility, we take another look at HDGE in a much different setting than 2011. [ETF Chart of the Day: Active Bear]
As one might expect, with equities roaring in 2012, HDGE has reversed course this year after a nice run in 2011. With the S&P 500 Index up 12.44% year to date, HDGE is down 19.26%, and since the fund’s inception in February of 2011, HDGE is down 20.41% versus the S&P 500 up 10.50%. [ETF Spotlight: HDGE]
HDGE is an actively managed ETF in which the sub-adviser, Ranger Alternative Management L.P., sells short equities based proprietary screens that isolate low earnings quality or aggressive accounting. Furthermore, the sub-adviser also looks for catalysts such as earnings driven events including downward earnings revisions or companies lowering forward guidance in identifying short candidates as well.
Currently, top short holdings in HDGE are OPEN (-4.14%), GT (-4.00%), COL (- 3.32%), KMX (-3.28%), and HBI (-3.06%).
As evidenced last year during the late summer equity sell-off, HDGE rose in price notably as the equity market sold off, and currently with indices flirting with new recent highs, HDGE is trading at its lowest levels since inception. However, for managers that believe that equities are due for a pullback or for those simply looking to hedge long exposure elsewhere in portfolios, HDGE may present a compelling opportunity.
AdvisorShares Active Bear ETF