AdvisorShares Trust - AdvisorShares MSOS 2x Daily ETF (MSOX)

Overview

The AdvisorShares MSOS 2x Daily ETF (MSOX) seeks daily investment results, before fees and expenses, of 200% of the performance of the AdvisorShares Pure US Cannabis ETF (MSOS). It is a leveraged ETF focused on the U.S. cannabis sector, aiming to amplify the daily returns of MSOS.

Reputation and Reliability

AdvisorShares specializes in actively managed ETFs, some with a thematic focus. Their reputation is built on offering innovative investment solutions, but the leveraged nature of this ETF adds complexity.

Management Expertise

AdvisorShares has a team experienced in managing thematic and actively managed ETFs, including those focused on the cannabis industry. Managing leveraged products requires specific expertise in risk management and trading.

Goal

To achieve daily investment results, before fees and expenses, corresponding to two times (200%) the daily performance of the AdvisorShares Pure US Cannabis ETF (MSOS).

Investment Approach and Strategy

Strategy: Leveraged ETF aiming for 2x daily exposure to the performance of MSOS, which tracks U.S. cannabis companies.

Composition Primarily invests in financial instruments such as swap agreements, futures contracts, and other derivatives to achieve its leveraged exposure to MSOS. Does not directly hold cannabis company stocks.

Market Share: MSOX has a relatively small market share compared to non-leveraged cannabis ETFs due to its higher risk profile.

Total Net Assets (AUM): 19390000

Key Competitors

• AdvisorShares Pure US Cannabis ETF (MSOS)
• Roundhill Cannabis ETF (WEED)
• Amplify ETF Trust - Amplify Alternative Harvest ETF (MJ)

Competitive Landscape

The competitive landscape includes both leveraged and unleveraged cannabis ETFs. MSOX offers amplified daily returns, attracting risk-seeking investors, but its leveraged structure can lead to significant losses. Competitors like MSOS provide direct exposure to the U.S. cannabis market without leverage, appealing to investors with a lower risk tolerance. Advantages of MSOX is its potential for higher returns, while disadvantages are higher volatility and risk of principal loss due to compounding.

Historical Performance: Historical performance is highly volatile due to the leveraged nature. Long-term performance can deviate significantly from 2x the returns of MSOS due to compounding effects.

Benchmark Comparison: The ETF aims to achieve 2x the daily performance of MSOS, so its benchmark is essentially 2x MSOS's daily returns. Performance can vary substantially due to the impact of compounding and fees.

Expense Ratio: 1.75

Average Trading Volume

The average trading volume of MSOX is moderate, which can affect the ease of buying and selling shares.

Bid-Ask Spread

The bid-ask spread can be wider than non-leveraged ETFs, reflecting the higher trading costs and risk associated with the fund.

Market Environment Factors

MSOX is heavily influenced by the regulatory environment surrounding cannabis in the U.S., investor sentiment towards the cannabis industry, and the performance of MSOS. Economic factors also play a role, impacting overall market sentiment and investment flows.

Growth Trajectory

The growth trajectory of MSOX is dependent on the performance and growth of U.S. cannabis companies and investor appetite for leveraged exposure to the sector. Changes to strategy and holdings are influenced by the fund's objective to maintain 2x leverage to MSOS.

Competitive Edge

MSOX offers a unique value proposition for investors seeking leveraged exposure to the U.S. cannabis market. Its competitive edge lies in its 2x leverage, allowing investors to potentially amplify their gains (and losses) compared to non-leveraged ETFs. However, the leveraged nature also increases risk and potential for significant losses due to compounding. Its focused approach to the US cannabis market may appeal to investors who believe in that market's potential.

Volatility

MSOX exhibits high volatility due to its leveraged nature. Daily fluctuations can be significant, making it unsuitable for risk-averse investors.

Market Risk

The ETF is subject to market risk associated with the cannabis industry, including regulatory changes, competition, and shifts in consumer preferences. Leveraged ETFs also face the risk of compounding, where losses can be magnified and difficult to recover from.

Ideal Investor Profile

The ideal investor is a sophisticated investor with a high-risk tolerance, a strong understanding of leveraged ETFs, and a short-term investment horizon. They should be seeking to capitalize on short-term movements in the U.S. cannabis sector.

Market Risk

MSOX is best suited for active traders seeking short-term gains and willing to accept substantial risk. It is not appropriate for long-term investors or those with a low-risk tolerance.

The AdvisorShares MSOS 2x Daily ETF (MSOX) provides leveraged exposure to the U.S. cannabis market, targeting 2x the daily performance of MSOS. While it offers the potential for amplified returns, it also carries significant risks due to its leveraged structure and compounding effects. It's suitable for short-term, high-risk traders familiar with leveraged ETFs. Investors should carefully consider their risk tolerance and investment horizon before investing in MSOX.

Data Sources:

• AdvisorShares website
• ETF.com
• Yahoo Finance

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risk, including the potential loss of principal. Leveraged ETFs are not suitable for all investors.