When I initially chose the AdvisorShares Vice ETF (NASDAQ:ACT) for InvestorPlace.com’s Best ETFs for 2020 contest, I expected it to float around where stands today on the leader board. In eighth place, it isn’t a winning pick, but it’s not a losing pick, either.
Since ACT is an actively managed exchange-traded fund, its managers can adapt to the ever-changing and outright bananas market conditions we’ve seen so far in 2020. It’s a convenient safety net to have, and one that ACT’s managers took advantage of this quarter.
ACT Portfolio manager Dan Ahrens commented in the fund’s May review: “[W]e can choose to hold extra cash when market conditions appear lousy and can choose to invest opportunistically in stocks of our choosing. During May, we increased holdings in the restaurant and bar stocks that we hold due to alcohol sales and enjoyed their nice bounce back.”
Although it’s down about 9% year-to-date, ACT gained 5.90% on its net asset value (NAV) and 5.88% on its market price for the month of May. Its holdings in “recession-resistant” areas like alcohol are still fairing well.
According to Nielsen, U.S. alcohol sales alone have “grown nearly 27%.” And that’s since the initial widespread lockdown in March, when consumers first flocked to stores to stock up their liquor cabinets.
Where ACT’s Top Holdings Stand Today
Of the fund’s 31 holdings, TMO and SAM are at the top, with the portfolio’s weight in these holdings at 7.79% and 7.35%, respectively. ABBV, which recently received an upgrade to “outperform” from “market perform” from analysts at Atlantic Equities, is in third with a portfolio weight of 6.65%.
TMO stock popped 3.29% on Tuesday, June 30. Thermo Fisher is one of the diagnostic makers that received Food and Drug Administration emergency use authorization to test for the novel coronavirus in March. Since then, they have been making over five million tests per week, but that number could increase.
At a Senate hearing Tuesday, Dr. Anthony Fauci stressed that if the country continues on its current trajectory, new cases of Covid-19 could reach 100,000 per day. Given that the recent spike in U.S. coronavirus cases is at around 40,000 a day, there will be significant demand for more tests from TMO.
As mentioned earlier, the No. 2 holding in the ACT ETF is Boston Beer. SAM stock is up almost 44% in 2020 thanks to the rise in alcohol sales as well as the spiked seltzer trend. Boston Beer is counting on spiked seltzer’s long-term popularity. The company has already released lemonade and ice cream versions of Truly Hard Seltzer this summer.
Earlier this month, RBC Capital Markets analyst Nik Modi said SAM stock will keep growing because of the strength of its Truly brand of hard seltzers. Modi has an “outperform” rating on the stock and a price target of $575.
Is ACT Still One of the Best ETFs to Buy This Year?
The fact that the AdvisorShares Vice ETF has an A rating from the MSCI ESG Fund doesn’t hurt, either. The rating measures the resiliency “of mutual funds and ETFs to long term risks and opportunities arising from environmental, social and governance (ESG) issues.” Ratings range from best (AAA) to worst (CCC).
With the healthcare and alcohol sectors currently carrying ACT through the various market cycles of 2020, the fund has a slight chance of improving its ranking in the Best ETFs contest. Even if it doesn’t move higher, this fund is just fine being safe at an average standing.
Anna Jacoby is a web editor for InvestorPlace.com. As of this writing, she did not hold a position in any of the aforementioned securities.