In an unusual move, an ETF subadviser is publicly questioning its termination by the exchange-traded fund sponsor.
“It's not right,” said Charles Biderman, CEO of TrimTabs Asset Management, regarding the ending of his firm's portfolio management of the AdvisorShares TrimTabs Float Shrink ETF. “We have had strong performance, and they are replacing us for no reason,” Mr. Biderman said in an interview.
An SEC filing shows that TrimTabs will be replaced as of July 1 by Wilshire Associates as subadviser for the $177 million fund.
AdvisorShares spokesman Ryan Graham said CEO Noah Hamman would be unavailable for comment. But Mr. Graham released a statement from Mr. Hamman that said, “We are in constant communication with our subadvisers about the funds they subadvise, but typically we treat those communications as confidential, especially in situations like this.”
Mr. Hamman said many factors go into the decision-making process on whether to select, retain or terminate a subadviser. “With any decision, however, the guiding principle is what we think is in the best interests of the fund investors,” he said.
Mr. Biderman, founder of TrimTabs, originally objected to the change in a news release, saying ETF shareholders were disappointed. Since inception, he said TrimTabs Float Shrink ETF has outperformed the Russell 3000 index by 2.49% annually. Additionally, the ETF gained 3.81% in the first quarter of 2016, he said.
The fund started in October 2011.