AdvisorShares Dorsey Wright FSM US Core ETF (DWUS) seeks to track a momentum-based strategy that selects U.S. stocks using Dorsey Wright's relative strength methodology, which identifies securities showing superior price performance compared to peers over specific time periods.
How It Works
The fund employs an actively managed approach using Dorsey Wright's proprietary relative strength ranking system to select U.S. equities across all market capitalizations. Portfolio managers analyze price momentum patterns and technical indicators to identify stocks with the strongest relative performance trends. Holdings are typically rebalanced monthly based on updated momentum rankings, with position sizes determined by conviction levels rather than market capitalization weighting.
Key Features
- Uses proprietary Dorsey Wright momentum methodology with over 50 years of technical analysis expertise and research backing
- Actively managed approach allows for tactical adjustments based on changing market momentum patterns and relative strength signals
- Zero expense ratio structure makes it cost-competitive compared to other actively managed momentum-focused equity strategies
Risks
- This ETF can lose value when momentum strategies underperform, particularly during market reversals when previously strong stocks suddenly decline sharply
- Active management decisions may result in poor stock selection or timing, causing underperformance versus passive broad market index funds
- Momentum investing can experience extended periods of underperformance during value-driven markets, potentially lasting multiple years in some cycles
Who Should Own This
Best suited for tactical satellite allocation (5-15% of equity portfolio) for investors with medium-to-high risk tolerance and 2-5 year time horizons. Appropriate for those seeking momentum exposure as a complement to core index holdings and comfortable with active management volatility.