April ended up being a relatively benign month for domestic equities and fixed income. Equities ended the month slightly higher while rates ended the month slightly lower with the curve flattening a tiny bit. Internationally, equities fared well with most of the positive performance coming after the French Presidential election. Markets seem to be pricing in a Macron victory in the runoff, which would lead to a more stable Eurozone and less likely "Frexit" outcome (French leaving the Euro like the British voted to do last summer).
In the collared equity portion of the Stadion Trilogy Alternative Return Fund, we saw relative underperformance of our flight to quality equity positions compared to the S&P 500, much on the back of names like Alphabet and Facebook* as they continue to lead the way in the technology sector for the year. Given April was an up-month for the broad index, as one may expect, there was a natural drag from our protective collar. The contribution effect of this portion of the fund was -0.54%.
The option income portion of the Fund fared better during April. The fixed income funds inside the portfolio contributed positively to performance with rates slightly lower for the most part. Option writing within the fund also contributed to performance with the low amount of movement in the S&P 500 over the month. While low levels of implied volatility mean that we collect less for selling options, many times we are still able to buy them back at a gain if markets don't move very much over the time period that we hold the positions. The contribution effect of this portion of the fund was 0.51%.
The market movement portion of the Stadion Trilogy Alternative Return Fund did not have a large impact on the Fund for the month given the slight move higher in equity markets. The long side of market movement made a slight positive contribution, while we paid for protection on the short side of market movement. The overall contribution effect of this portion of the Fund was -0.06%.
To view the most recent performance for the Stadion Trilogy Alternative Return 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 Stadion Trilogy Alternative Return Fund held 0% Alphabet and 0% Facebook as of 4/30/17.
The index shown is 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. One cannot invest directly in an index. All Benchmarks composite data supplied by third party vendors, assumes re-investment of all dividends.
The Stadion Trilogy Alternative Return Fund will consist of an equity component (“Collared Equity”), an income component (“Option Income”) and a trend component (“Market Movement”).
Collar: A protective option strategy created by purchasing an out of the money put option while simultaneously writing an out of the money call option. Call: An option which conveys the right to buy something at a specific price. Put: An option which conveys the right to sell something at a specific price. An option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction. The price of an option derives from the difference between the reference price and the value of the underlying asset (commonly a stock, a bond, a currency or a futures contract) plus a premium based on the time remaining until the expiration of the option.
Performance numbers as of April 30, 2017.
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.
Other associated risks: Market risk inside collar, tracking risk, path dependency risk.
Derivative instruments can be volatile and the potential loss to the Fund may exceed the Fund’s initial investment. Derivative instruments may be difficult to value and may be subject to wide swings in valuations caused by changes in the value of the underlying instrument. The use of these instruments requires special skills and knowledge of investment techniques that are different than those normally required for purchasing and selling securities. The Fund could also experience losses if it is unable to close out a position because the market for an instrument or position is or becomes illiquid.
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. Investment objective: Total return, with an emphasis on lower risk and volatility than the U.S. equity 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.