The actively managed AdvisorShares Madrona Forward Domestic ETF (NYSEArca: FWDD) has garnered the prestigious five-star rating from Morningstar.
FWDD’s five-star rating applies to “its three-year and overall risk adjusted performances from inception through August 31, 2014 out of 1,381 funds in Morningstar’s Large Blend category,” said AdvisorShares in a statement.
FWDD seeks to outperform the S&P 500 by building a portfolio of up to 500 of the largest U.S. companies using a weighted allocation methodology based on consensus analyst estimates of the present value of future expected earnings relative to the share price of each security, according to AdvisorShares.
FWDD, which debuted in June 2011, has returned 18.4% since inception compared to 17.7% for the S&P 500 and 15.7% for the average large-cap blend fund, according to Morningstar data.
“FWDD is managed by Madrona Funds, an Everett, Washington-based SEC registered investment advisor and asset manager founded by Brian Evans that specializes in domestic equity, international equity and global fixed income strategies,” said AdvisorShares in the statement.
No stock accounts for more than 0.72% of the ETF’s weight. Top-10 holdings include Gilead Sciences (NasdaqGS: GILD), Marathon Petroleum (NYSE: MPC), Tesoro (NYSE: TSO), Southwest Airlines (NYSE: LUV) and Morgan Stanley (NYSE: MS).
The ETF’s largest sector allocation is 25% to consumer discretionary followed by 14% to technology. Energy, health care and industrials each receive weights of 11%.
FWDD joins the AdvisorShares Peritus High Yield ETF (NYSEArca: HYLD) as five-star rated ETFs in the AdvisorShares lineup. Another Madrona ETF, the AdvisorShares Madrona Forward Global Bond ETF (NYSEArca: FWDB), has a four-star rating.
Last week, actively managed ETFs eclipsed the $18 billion in combined assets management mark for the first time, according to AdvisorShares data. The Maryland-based issuer has 26 ETFs with a combined $1.8 billion in assets.
Increased demand for actively managed ETFs and the potential for a more favorable regulatory environment could make actively managed ETFs a $500 billion asset class by 2020, according to a new report by SEI Investments. [Rapid Growth Seen for Actively Managed ETFs]
AdvisorShares Madrona Forward Domestic ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of HYLD.