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Stadion Tactical Growth Fund Commentary May 2017

U.S. stocks rose quietly to new highs on record low volatility in May. We saw NASDAQ Composite Index hit a new high on 10 out of the 22 market days in May, and the S&P 500 making a new high on 7 out of the 22 market days. The technology heavy NASDAQ Composite gained 2.50% over the month with the S&P 500 adding 1.41% on a total return basis. Much of the market’s gains can be attributed to the “FANG” stocks (Facebook, Amazon, Netflix, and Alphabet, the parent of Google); there is little doubt the market is being driven by tech right now.

On a historical basis, May has been a fairly strong month. Since 1990, May has been positive 20 out of 28 years for the S&P 500 and 19 out of 28 years for the NASDAQ. As we have seen many times since the election, the market has decided to ignore what could have been destabilizing events: a less accommodative Federal Reserve (Fed), a bombing in the United Kingdom, a downgrade in the debt of China, and continued distractions in the Trump administration. In the past, any one of these events could have caused the market to fall, but instead equity prices powered ahead. The Fed’s preferred measure of inflation, the core Personal Consumption Expenditures (PCE) index, slipped to its worst level since December 2015 on a year over year basis—nearly half a point below the Federal Open Market Committee’s publicly stated target. Despite the weaker recent inflation reports, Fed officials anticipate further increases in inflation citing the tightening labor market and a growing U.S. economy. 

The Stadion Tactical Growth Fund seeks to align its portfolio with an asset allocation reflective of current returns and risks in the market by analyzing risks and returns of over 1500 exchange traded funds (ETFs) through Sharpe-ratio ranking. This ranking process helps guide our selection of ETFs in an attempt to improve returns for lessened risk on both the traditional equity beta side of an asset allocation but, more importantly, on common investments used to diversify returns. As the equity markets climb ever higher, the equity exposure in the Stadion Tactical Growth Fund seeks to provide correlated returns, while the defensive and non-correlated positions seek to provide some protection to the portfolio from full exposure to equity drawdowns.

The current allocation in the Stadion Tactical Growth Fund is roughly 84% broad equity exposure, with the remaining 16% in non-correlated positions. The allocation split between equity and non-correlated defensive positions shifted during the month of May in favor of increased equity exposure. Going forward, we will continue monitoring key market factors to determine the optimal allocation among our various Sharpe-ratio centric measures to continue to participate in investments which we feel can add the most value.

To view the most recent performance for the Stadion Tactical Growth 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 indexes shown are 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. The NASDAQ is a broad based capitalization-weighted index of all NASDAQ National Market and Small Cap Stocks. The core Personal Consumption Expenditures (PCE) index is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. One cannot invest directly in an index.

All Benchmarks composite data supplied by third party vendors, assumes re-investment of all dividends.

Sharpe ratio: Measures the excess return per unit of deviation, or risk.

Diversification does not eliminate the risk of experiencing investment losses.

Correlation is a measure of how investments move in relation to one another. A correlation of 1 means two asset classes move precisely in line with each other, while a correlation of -1 means they move in the exact opposite direction.

*Performance numbers as of May 31, 2017

Risks

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.

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.

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.