The Art of High-Conviction Investing

In a market often dominated by high-frequency algorithms and reactionary trading, the AdvisorShares Focused Equity ETF (CWS) offers a refreshing alternative. Led by Eddy Elfenbein, the creator of the acclaimed Crossing Wall Street blog, this ETF is built on a foundation of disciplined selection and long-term commitment.

Rather than chasing the latest market noise, CWS focuses on a curated selection of high-quality businesses designed to compound wealth over time.

The Strategy: A Disciplined Selection Process

The core of CWS is the annual "Buy List," a proprietary selection process Elfenbein has refined since 2006.

• Concentrated Quality: The fund maintains a lean portfolio of exactly 25 stocks. This concentration ensures that the manager's highest-conviction ideas drive the fund's performance.
• Fundamental Rigor: Stocks aren't chosen based on technical charts or momentum. Instead, the focus is on "Steady Eddys"—companies with durable competitive advantages, consistent earnings growth, and robust balance sheets.
• Annual Rebalancing: Each January, the portfolio is meticulously reviewed. Underperforming positions or those with shifting fundamentals are replaced with five new high-potential candidates, ensuring the portfolio remains aligned with its quality-first mandate.

A High-Conviction Portfolio

The CWS portfolio is built on concentration rather than broad-market dilution. By limiting the fund to exactly 25 positions, the strategy ensures that every holding must earn its keep based on rigorous fundamental criteria.

CWS's "best-of-breed" approach results in a portfolio that looks significantly different from a standard index. While the S&P 500 Index is often dominated by a handful of mega-cap tech giants, CWS seeks out quality at a reasonable price stocks across the mid- and large-cap landscape. 

As of 1/31/26, the fund is heavily anchored in sectors known for reliable cash flow and durable competitive moats:

• Healthcare: This is the fund's largest sector exposure, featuring stable industry leaders like McKesson (MCK), Henry Schein (HSIC), and Stryker (SYK).
• Technology & Industrials: The portfolio balances high-precision tech with industrial reliability. Key positions include IES Holdings (IESC), a leader in electronic connectors, and Comfort Systems USA (FIX), which provides essential mechanical and electrical services.
• Consumer Staples & Discretionary: The fund holds resilient consumer-facing businesses with strong pricing power, such as the convenience retailer Casey’s General Stores (CASY).

The "Fulcrum Fee": Skin in the Game

One of the most innovative aspects of CWS is its fee structure. Most ETFs charge you the same amount whether they make you money or lose it. CWS uses a performance-based fee.

• If the fund beats the S&P 500, the management fee goes up slightly.
• If it underperforms, the fee drops.

It’s one of the few funds where the manager’s paycheck is directly tied to your success.

Who Is CWS for?

CWS isn't for the day trader looking for a 50% gain by Friday. It’s for the long-term investor who believes that quality + time = wealth. It is a "buy-and-hold" vehicle in the truest sense, prioritizing business growth over trading volume. By focusing on a small group of elite companies, CWS aims to capture the long-term upside of the U.S. equity market while filtering out the daily volatility of broader indices. 

THE BOTTOM LINE: CWS demonstrates that a focused, disciplined approach to stock selection can be a powerful engine for long-term growth. It’s an investment in businesses, not just tickers.