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AdvisorShares Drafts Global Buy-Write ETF

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AdvisorShares, the Bethesda, Md.-based firm known for its active strategies, filed paperwork with U.S. regulators to market an actively managed fund-of-funds that combines a portfolio of ETPs with call options on its underlying securities to generate what the company calls “repeatable returns” no matter the market cycle.

The STAR Global Buy-Write ETF (NYSEArca:VEGA) will consist of a broadly diversified portfolio of ETFs and ETNs put together based on the combination of risk, return and their correlation to each other.

The fund then adds a derivatives overlay to the strategy by selling call options on its portfolio holdings. The methodology is a proprietary overwrite strategy known as Volatility Enhanced Global Appreciation (also known as VEGA) created back in 2008 by the fund’s subadvisor, and AdvisorShares’ partner in this ETF, California-based Partnervest Advisory Services.

AdvisorShares’ buy-write ETF would not be the first in the space, but it would be the only actively managed and only global offering. Invesco PowerShares offers a buy-write strategy ETF, the PowerShares S&P 500 BuyWrite Portfolio (NYSEArca:PBP), but PBP is passively managed as it tracks an index that applies the buy-write strategy to the S&P 500.

VEGA will hold a long position in shares of its underlying ETFs, and write a call option on that same asset with the goal of realizing additional income from the option premium, the company said in the filing. The methodology is designed to generate quarterly returns.

VEGA’s portfolio will include ETPs across various sectors, which will be selected based on size, track record, diversification, correlation of an underlying index to other indexes as well as on the ability to write covered call options on that given ETP, the filing said.

No fees were disclosed in the filing.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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