AdvisorShares prepares “fund-of-funds” ETF

AdvisorShares has filed with the American Securities and Exchange Commission (SEC) for an actively-managed ETF to trade on the NYSE Arca.

The AdvisorShares Tactical ETF seeks to provide long-term capital appreciation by investing in a raft of underlying ETFs and ETPs believed to provide exposure to "durable trends" within the market.

This "fund-of-funds" will invest primarily in other US-listed ETFs across domestic and foreign equity, fixed income and commodities, although it may also invest in other types of ETPs such as ETNs and closed-end funds.

The Tactical ETF's investments will be selected by the fund's sub-advisor using a quantitative tactical asset allocation model. The evaluative quantitative tools specified by the SEC filing include interest rate spreads, option activity, market breadth and equity index trends.

The fund's managers will be able to adjust its portfolio between a 100% investment in equities and 100% fixed income assets or cash, depending on volatility and perceived risks in the equity markets.

Within that range up to 50% may be invested in foreign funds, up to 20% in commodities and up to 10% in currencies.

The filing does not give details of expenses or name the fund's sub-advisor, but does reveal that portfolio holdings will be disclosed daily, following the close of trading on the NYSE Arca.

With the SEC's investigation into derivatives still underway, AdvisorShares has also stipulated that the Tactical ETF will not be investing in leveraged or inverse ETFs.