The 2019 rally came to a screeching halt in May as market volatility picked up on increasing geopolitical concerns. The S&P 500 Index ended May down -6.35% and the Dow Jones Industrial Average lost -6.32 %. The Nasdaq Composite Index was the hardest hit index as the trade war talks have significantly impacted the technology industry. The tech-heavy index ended may down -7.78%. Emerging markets, too, are feeling the effects of the US-China trade war as the MSCI Emerging Net Total Return Index ended May down -7.26%. International developed markets, represented by the MSCI EAFE Net Total Return, Index lost -4.80%.
The Stadion Tactical Defensive Fund started May fully invested with a 100% equity allocation. The Cyclical Trend Measure and the Dynamic Trend Measure both signaled a favorable market environment for equity securities. However, by 5/13/2019 the underlying indicators in the Dynamic Trend Model decreased enough to reduce the Dynamic Trend’s equity allocation to 0%. This trade brought the total Fund’s allocation to 50% equity and 50% defensive positions, which is how the Fund ended the month. The model is in an interesting environment as the Dynamic Trend Model is calling for a risk-off environment while the Cyclical Trend Model is still fully invested. With a couple more weeks of deteriorating market conditions, the Cyclical Trend Model could see a reduction in equity exposure. If the market stabilizes and rebounds, the Dynamic Trend Model will be able to react quickly and reinvest in equities.
The Stadion Tactical Defensive Fund is a conservative equity fund seeking to participate in expanding market cycles and retains the ability to become 100% defensive if conditions deteriorate. Over a full market cycle, the Stadion Tactical Defensive Fund tends to have a conservative profile It combines two elements of trend following: a focus on longer-term cyclical trends (the core portfolio) and the balance of risk-mitigation and returns-seeking among shorter to intermediate trends (the satellite portfolio). The goal of these collaborative strategies is capital appreciation as measured across full market cycles.
In May, the Fund returned -5.61% versus its benchmark of the Morningstar Moderate Target Risk Index of -2.99%.
To view the most recent performance for the Stadion Tactical Defensive Fund, click here.
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.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange.
The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Net Total Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. As a total return index, it tracks the capital gains of a group of stocks over time and assumes reinvestment of any cash distributions.
The MSCI Emerging Markets Net Total Return Index consists of 23 economies including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates. The MSCI is a float-adjusted market capitalization index. As a total return index, it tracks the capital gains of a group of stocks over time and assumes reinvestment of any cash distributions.
The Morningstar Target Risk Index family is designed to meet the needs of investors who would like to maintain a target level of equity exposure through a portfolio diversified across equities, bonds and inflation-hedged instruments. The Morningstar Moderate Target Risk Index seeks approximately 60% global equity exposure.
One cannot invest directly in an index.
The Reports’ commentary, analysis, opinions, advice, and recommendations represent the personal and subjective views of the author and are subject to change at any time without notice.
There are additional costs and potential risks associated with investing in domestic and international Exchange Traded Funds (ETFs). 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.
Diversification does not eliminate the risk of experiencing investment losses. There are risks associated with the potential investment of the Fund’s assets in fixed income investments, which include credit risk, interest rate risk, and maturity risk among others. These risks could affect the value of investments of the Fund, possibly causing the Fund’s share price and total return to be reduced and fluctuate more than other types of investments. Additional information about fixed income risks can be found in the Fund’s SAI. Investment Objective: Seek long-term capital appreciation.
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.