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Stadion Tactical Defensive Fund Commentary January 2017

The multi-month price consolidation, following the 9% surge after the Trump election, continued into January. Investors began to question the political realities of President Trump’s policies of cutting taxes, deregulation and increased infrastructure spending. Near the end of the month, it appeared the markets were set to break out when the Dow Jones Industrial Average cleared the psychologically important level of 20,000. That euphoria lasted a brief two days before investors and traders began to focus on increasing tensions with Mexico due to talk of tariffs. Mexico’s President, Enrique Peña Nieto, canceled a visit to the U.S. amid pressure from President Trump to pay for a border wall.

Following the Mexico/U.S. standoff, President Trump issued an executive order restricting immigration to tighten national security, sparking widespread protests and confusion around the world. Investors face serious challenges determining if President Trump’s policy mix will stimulate growth or if his protectionist policies will hinder economic progress.

Regardless of how President Trump’s policies influence the market, the Stadion Tactical Defensive Fund will continue to follow its processes. The Fund seeks to combine two elements of trend following. One of which focuses on longer term cyclical trends (the core portfolio) and another which seeks to balance safety and return among shorter to intermediate trends (the satellite portfolio). 

Both the core and satellite portions of the Stadion Tactical Defensive Fund entered the month fully invested in broadly diversified U.S. equity Exchange Traded Funds (ETFs) and a small position in a currency hedged international equity ETF. The Fund gained +1.18% for the month versus a gain of +1.90% for the S&P 500 and a +1.27% gain for the Morningstar Tactical Asset Allocation Category. The Fund’s broad diversification to other asset classes and sectors resulted in the performance drag compared to the S&P 500, which consists of only U.S. large cap stocks. 

The markets have traded for 76 days in a row without an S&P 500 close down -1% or more. Markets cannot trade sideways forever. Market breadth can provide clues to the potential direction of the breakout. We are beginning to see the earliest signs of deterioration in our shorter term breadth measures which could potentially lead to lower prices. 

The current gap between political expectations and political reality is sizable. Will we see investor optimism continue pushing the market higher, or will investors be disappointed in the lack of follow through on Trump’s promises? We won’t attempt to predict the outcome, but we will wait to see how the new administration evolves and continue to follow the Stadion investment processes.

To view the most recent performance for the Stadion Tactical Defensive Fund, click here.


Performance data quoted represent past performance. Past performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money. Stadion’s actively managed portfolios may underperform in bull markets. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance data may be lower or higher than the performance data quoted. To review our most recent monthly performance, please visit www.stadionfunds.com.

An investor should consider the investment objectives, risks, and charges and expenses of the Stadion Funds carefully before investing. The prospectus contains this and other information about the Funds. A copy of the prospectus is available by calling Stadion Funds directly at (866) 383-7636 or Stadion Money Management, LLC, the investment advisor, at (800) 222-7636. The prospectus should be read carefully before investing.

The index shown is defined as follows.

The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices. All Benchmarks composite data supplied by third party vendors, assumes re-investment of all dividends.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

One cannot invest directly in an index. All Benchmarks composite data supplied by third party vendors, assumes re-investment of all dividends.

Diversification does not eliminate the risk of experiencing investment losses.

*Performance numbers as of January 31, 2017

Risks

There are additional costs and potential risks associated with investing in domestic and international Exchange-Traded Funds (“ETF’s”). Investment in the Fund is subject to investment risks, including, without limitation, market risk, management style risk, risks related to “fund of funds” structure, sector risk, fixed income risk, tracking risk, risks related to ETF net asset value and market price, foreign securities risk, risks related to portfolio turnover and small capitalization companies risk. Since each Stadion Fund is a “fund of funds,” an investor will indirectly bear fees and expenses charged by the underlying ETFs and investment companies in which a Stadion Fund invests in addition to a Stadion Fund’s direct fees and expenses. More information about these risks and other risks can be found in the Fund’s prospectus.

There are risks associated with the potential investment of the Tactical Defensive Fund’s assets in fixed income investments, which include credit risk, interest rate risk, and maturity risk. Investment objective: Seek capital appreciation.

The Fund’s foreign investments generally carry more risks than funds that invest strictly in U.S. assets, including currency risk, geographic risk, and emerging market risk. Risks can also result from varying stages of economic and political development; differing regulatory environments trading days, and accounting standards; and higher transaction costs of non-U.S. markets.

The Stadion Funds are distributed by ALPS Distributors, Inc.                                                                                        
 

An investor should consider the investment objectives, risks, and charges and expenses of the Stadion Funds carefully before investing. The prospectus contains this and other information about the Funds. A copy of the prospectus is available by calling Stadion Funds directly at (866) 383-7636 or Stadion Money Management, LLC., the investment advisor, at (800) 222-7636. The prospectus should be read carefully before investing.

The Stadion Funds are distributed by ALPS Distributors, Inc. An investment in the Funds involves risk, including loss of principal.