Market leadership rarely stays in one place for long.
At different points in a market cycle, investors may favor growth, value, momentum, quality, low volatility or simply the largest companies in the market. The challenge is that those shifts are difficult to anticipate—and yesterday’s leaders do not necessarily remain tomorrow’s.
The AdvisorShares Dorsey Wright FSM U.S. Core ETF (ticker: DWUS) takes a different approach.
Rather than maintaining a fixed allocation to a particular investment style or factor, DWUS uses Nasdaq Dorsey Wright’s relative-strength and momentum-based Fund Score Method to evaluate a universe of U.S. large-cap market and factor ETFs.
Relative strength measures how an investment is performing compared with other investments — not against its own price history, and not through a valuation or fundamental screen. The Fund Score Method ranks the eligible universe head-to-head, and the two highest-ranked funds are selected for the portfolio. Because the measure is relative, a fund can rank near the top even in a falling market. What matters is how it compares with the alternatives, not whether it is rising in absolute terms.
That ability to concentrate in areas exhibiting stronger relative strength was particularly visible during the second quarter of 2026.
As large-cap U.S. equities rebounded, DWUS returned 24.97% (NAV) during the quarter, compared with 15.20% for the S&P 500 Index. At quarter-end, the portfolio was allocated to the Invesco NASDAQ 100 ETF (QQQM) and iShares MSCI USA Momentum Factor ETF (MTUM), resulting in meaningful exposure to many of the market’s largest companies and a pronounced technology tilt. But the portfolio is not designed to remain there indefinitely.
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost. For standardized fund performance please click the link above.
Looking through those two ETFs to their underlying stocks gives a clearer picture of what that positioning actually meant:
Two holdings, but hundreds of underlying stocks — and a portfolio considerably more concentrated in technology and larger companies than a simple "U.S. core" label might suggest.
By August 20, DWUS's two primary holdings were the iShares MSCI USA Quality Factor ETF (QUAL) at 50.05% and the Invesco NASDAQ 100 ETF (QQQM) at 49.79%, with a small cash position. The portfolio had shifted away from the momentum factor exposure held at the end of June and toward quality, while maintaining its NASDAQ-100 exposure.
That change illustrates the sell discipline built into the process. A holding does not leave the portfolio because someone forms a new opinion about it. It leaves when its relative-strength rank deteriorates against the rest of the universe and another fund ranks higher.
DWUS is not built around a permanent view that growth, technology, quality or any other particular factor should always lead. Portfolio positioning is instead determined by the relative-strength rankings produced by the strategy's systematic process.
The same head-to-head relative-strength comparison is applied across the broader market as well. In Nasdaq Dorsey Wright's rankings below, domestic equities rank first among asset classes, and within domestic equities, cap-weighted and large-cap growth exposures rank ahead of equal-weighted and value exposures — the same directional signal reflected in DWUS's NASDAQ-100 position. DWUS applies this framework within its own universe of U.S. large-cap market and factor ETFs.
Source: Nasdaq Dorsey Wright. As of 8/20/26
DWUS is not designed to closely replicate the S&P 500. Its relative-strength process can overweight areas demonstrating stronger price leadership and move away from those that rank less favorably.
That flexibility also means performance can diverge meaningfully from a broad-market benchmark — in either direction. A concentrated position in market leaders may benefit the portfolio when those trends persist, while changes in leadership or reversals in momentum can create periods of relative weakness.
The objective of the process is not to predict which style will lead next. Instead, DWUS applies a repeatable framework for evaluating what is demonstrating stronger relative strength and adjusts the portfolio as those rankings evolve, with the aim of participating in trends while they persist.
For investors who believe market leadership changes over time but don't want to make discretionary calls on when to rotate between growth, value, momentum, quality and broad-market exposure, DWUS provides a systematic way to make those decisions within a U.S. large-cap allocation.
Market leadership will continue to change. DWUS is built to keep evaluating it.
Read Nasdaq Dorsey Wright’s full DWUS 2nd Quarter 2026 Portfolio Review
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— For Institutional Investor Use Only. Not for Public Distribution —
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Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus and summary prospectus, a copy of which may be obtained by visiting the Fund’s website at www.AdvisorShares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor. Performance data represents past performance and does not guarantee future results. Current performance may be higher or lower than the performance quoted. The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks. One cannot invest directly in an index. Holdings and allocations are subject to risks and to change. The Advisor’s judgment about the markets, the economy, or companies may not anticipate actual market movements, economic conditions or company performance, and these factors may affect the return on your investment. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual issuers, industries or the securities market as a whole. The market value of debt securities held by the Fund typically changes as interest rates change, as demand for the instruments changes, and as actual or perceived creditworthiness of an issuer changes. |