February was on track to be a good month for investors even as fear began building about a potential pandemic. However, as Coronavirus began appearing in folks who had not travelled to known effected territories, namely China, nor had been in contact with individuals known to have contracted the virus markets began preparing for a worst-case scenario. This pricing-in of the anticipated effect of a full-blown pandemic of the type that could lead to global recession drove stocks deeply downward in the final week of the month. From its mid-month high the S&P 500 dropped 12.7% while the Dow Jones Industrial Index took a-13.32% blow during only the final seven trading sessions of the month. As money rushed into U.S. Treasures the yield on those flight-to-quality holdings plunged to record lows.
As Federal Reserve Policy continues to be among the most important economic indicators the market began anticipating a new Fed rate cut.
For the month the S&P 500 Index lost -8.23%, the NASDAQ Composite Index - 6.22%, and the Dow Jones Industrial Average Index -9.75%. Emerging and Developed markets suffered as well as the MSCI Emerging Net Total Return Index was off -5.27%i, and the MSCI EAFE Net Total Return Index lost -9.04%.
Our allocation at the beginning of February was fairly conservative at 66% Equities [52% U.S. & 14% International], 15% Fixed Income, and 19% Money Market. The equity markets rallied strongly and were making new highs through February 19. On February 6 we added a position in the Russell 1000 and added slightly to our already existing positions in U.S. and Japanese equties. The equity markets started tumbling down on February 20 and finished the month with a lot of volatility and downward price action. On February 25 we closed our position in Japan and on the 27th we sold our recently purchased Russell 1000. We closed the month out with 66% Equities [58% U.S. & 8% International], 15% Fixed Income, and 19% Money Market].
Our allocation towards equities is under its long-term average while our cash position is very high. We will continue to monitor our rankings and holdings and attempt to build a diversified portfolio of Exchange Traded Funds (ETFs) that compensate well for risk.
The Stadion Tactical Growth Fund ended February -5.80%, while our benchmark, Morningstar Moderately Aggressive Target Risk was down-6.37%.
To view the most recent performance for the Stadion Tactical Growth 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 NASDAQ Composite is a broad-based capitalization-weighted index of all NASDAQ National Market and Small Cap Stocks.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange.
The Russell 1000 Index is a comprehensive large-cap index measuring the performance of the largest 1,000 U.S. incorporated companies, the Russell 1000 Index is reconstituted completely on an annual basis to ensure the index measure the large cap segment consistently and objectively over time. Each security in the Russell 1000 is float-adjusted market capitalization-weighted to ensure investable positions.
An Exchange Traded Fund (ETF) is a fund that tracks a specific index (bonds, commodities, etc.) but trades on stock exchange in the same manner as common stocks. ETFs tend to have higher liquidity than mutual funds.
The MSCI Emerging Markets Net Total Return Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
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 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 Moderately Aggressive Target Risk Index seeks approximately 80% global equity exposure.
One cannot invest directly in an index.
The Report’s commentary, analysis, opinions, advice, and recommendations represent the personal and subjective view 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 subjective 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 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 statement of additional information (“SAI”). Investment Objective: Seek long-term 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.
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.