March proved to be a terrible month for global equities as the Coronavirus Pandemic crippled markets. As fears of a recession spread among investors, U.S. markets slid into a Bear Market at the fastest pace in U.S. stock history. The U.S. economy suffered mightily as business across the country had to stop operations, some temporarily and others permanently, due to most of the nation experiencing shelter-in-place conditions. Initial jobless claims hit a historic high on March 27 reporting 3.28 million first-time filers. The Federal Reserve stretched its power to unprecedented lengths in order to limit the impact of the Coronavirus Pandemic. To this end, it stepped in to provide liquidity to financial markets and cut its benchmark interest rate to zero.
Markets ended the month with a strong rebound, though, as Congress passed a $2 Trillion Virus Rescue Plan. For the month of March, the S&P 500 Index lost -12.35%, the NASDAQ Composite Index lost -10.03%, and the Dow Jones Industrial Average Index lost -13.62%.
Our allocation at the beginning of March was slightly more conservative than our long-term average. Tactical Growth held 66% Equities [58% U.S. & 8% International], 15% Fixed Income, and 19% Money Market. The volatility and negative price action from late February exploded in March and many markets were in turmoil. On March 5 we sold 8% of our U.S. Equity holdings to money market. On March 11 we sold both our Technology sector ETF and International Developed markets ETF to money market, which brought our equity exposure down to 40%. On March 24 we sold 5% of our equity holdings to market. We ended March with a conservative portfolio of 35% U.S. Equity, 15% Short-Term Fixed Income, and 50% Cash.
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 ETFs that compensate well for risk.
In March, the Tactical Growth Fund’s I-share returned -5.39% versus its benchmark of the Morningstar Moderate Aggressive Target Risk Index that returned -12.23%.
To view the most recent performance for the Stadion Tactical Growth Fund, click here.
A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market's downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases.
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 phrase “$2 Trillion Virus Rescue Plan” refers to the Coronavirus Aid, Relief, and Economic Security Act or CARES Act. Its full text is located at https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf
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.