NEW YORK (TheStreet) -- The new AdvisorShares STAR Global Buy-Write ETF VEGA , launched Sept. 18, is an actively managed fund of funds that intends to provide consistent, repeatable returns across all market cycles. VEGA's targeted outcome is managed by a proprietary strategy, which happens to have the same name as its ticker symbol: VEGA ("Volatility Enhanced Global Appreciation"). Partnervest Advisory Services serves as the fund's subadvisor and portfolio manager.VEGA's VEGA is a global asset allocation strategy with covered call and put option overlays. The new ETF writes (sells) call options against each position seeking price appreciation and consistent income. The strategy also employs sales of cash-secured put options. When volatility is low, the portfolio manager buys protective put options to manage downside risk.I could not locate a description of the global asset allocation process, although the current holdings include cash at 54.5%, SPDR S&P 500 SPY , 15.0%, iShares MSCI Emerging Markets EEM , 14.9%, iShares DJ US Real Estate IYR , 7.4%, and Energy Select Sector SPDR XLE , 7.3%. Current option overlays include calls sold against the four equity positions along with purchased puts on SPY and iShares iBoxx $ High Yield Corporate Bond HYG .Partnervest has been managing similar accounts since October 2008. As of June 30, its VEGA Composite has a one-year return of -0.5%, vs. the S&P 500's 5.4%, and an annualized three-year return of 7.7% compared to 16.5% for the S&P 500. No risk metrics for the composite are provided.VEGA has an expense ratio of 2.01%, consisting of a 1.35% management fee, 0.42% in acquired fund fees and 0.24% of other expenses. Additional information is located in the press release on PRNewsire and AdvisorShares overview page, where you can also find a PDF fact sheet and prospectus.Analysis/Opinion: Despite all that available information, there is an abundance of unknowns about VEGA. Here are my top three concerns:
- The marketing literature states "VEGA can structure a target outcome" but fails to tell us what that target is. Not even a hint.
- Most investors embark on a covered call strategy as a means of increasing income or reducing risk. VEGA's literature does not provide any insight as to what investors should expect with regard to yield and distributions, other than distributions are planned to occur only once per year. No volatility, drawdown or other risk measurements were provided for the manager's VEGA Composite.
- The underlying global asset allocation is currently 54.5% in cash and money market, yet the strategy used to determine this allocation is not described or even mentioned.
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