The good news of improving relations between the U.S. and China, the signing of the United States-Mexico-Canada Agreement (USMCA), and positive consumer data all appeared to contribute to the market rally during the first three weeks of January. After some concern in recent months, investor sentiment shrugged off pretty much all impeachment news, too. Indeed, until the Coronavirus began its alarming spread, and fanned the fears of a pandemic, it appeared that 2020 was off to an historic start. Because pandemics are exceedingly difficult to account for, we saw a risk-off mood in the market.
The Coronavirus as already impacted earnings forecasts for several companies, and we must wait to see how it might also impact China, the world’s second largest economy.
For the month of January, the S&P 500 Index ended down -0.04% and the Dow Jones Industrial Average Index lost -0.89%. The NASDAQ Composite Index gained 2.03% on solid earnings from Apple and Amazon as technology remains the growth leader in markets. International markets were hit hard by the Coronavirus news as the MSCI Emerging Markets Net Total Return Index lost -4.66% and the MSCI EAFE Net Total Return Index declined -2.09%.
Our allocation at the beginning of January was aggressive with 81% Equities [62% U.S. & 19% International], 15% Fixed Income, and 4% Money Market. Month-end weakness in multiple equity markets caused us to trim our positions. On January 21 we sold our regional banks to money market. On January 30 we sold our remaining China position and biotech also to money market. We closed the month out with 66% Equities [52% U.S. & 14% 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 expect to be putting the cash to work very soon. 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.
Stadion Tactical Growth was flat for the month at 0.00%, while our benchmark, Morningstar Moderately Aggressive Target Risk was down -0.94%
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.
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.
United States-Mexico-Canada Agreement (USMCA) is a free trade agreement between the three nations and is a renegotiated version of the North American Free Trade Agreement (NAFTA).
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.