Domestic equities continued to perform well during April and the S&P 500 Index finished the month up 4.05%. This is just the latest positive sign that make recent routs seem like years ago. Fixed income rates were slightly higher across the majority of the curve for the month though the very front end of the curve was mostly unchanged. As such the Bloomberg Barclays Capital U.S. Aggregate Total Return Bond Index was mostly flat, as the yield offset small rises in rates.
The collared equity portion of the Trilogy Alternative Return Fund finished slightly positive for the month of April. Our dividend paying stocks participated in the stock rally in April, albeit at a lesser rate than the broader equity market. The S&P 500 Index based collar that the fund employs to mitigate the risk of prolonged market selloffs was a natural drag as equities continued higher. The contribution effect of this portion of the fund was .24%.
There were small gains in from the fixed income portion of our option income bucket of the fund. It is this fixed income portion which serves as collateral for our option writing strategy. The option writing strategy we employ in the fund usually works best in flatter environments as one-way market moves tend to punish short option strategies. Our "wings" which are employed as risk-mitigating tactics against large moves in equity markets have helped to dampen the blow from the one way move so far this year in equity markets. The contribution effect of this portion of the fund was -.56%. The market movement bucket was mostly flat for April. The gains from the long side of this bucket were offset by losses from the put side of the bucket. The contribution effect of this portion of the fund was -.06%.
To view the most recent performance for the Stadion Trilogy Alternative Return 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.
A collar is an option strategy that limits the range of possible positive or negative returns on an underlying security to a specific range.
An option strategy that limits the range of possible positive or negative returns on an underlying security to a specific range.
A put is an option which conveys the right to sell something at a specific price.
Bloomberg Barclays Capital U.S. Aggregate Total Return Bond Index is an unmanaged index of prices of U.S. dollar-denominated investment-grade fixed income securities with remaining maturities of one year and longer.
A short, or short position, is selling first and then buying later. The trader's expectation is that the price will drop; the price they sell at is higher than the price they buy it at later. The difference between the sale price and the buy price produces a profit or loss.
One cannot invest directly in an index.
The Reports’ commentary, analysis, opinions, advice, and recommendations represent the personal and subjective views 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 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.
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The Stadion Funds are distributed by ALPS Distributors, Inc. An investment in the Funds involves risk, including loss of principal.