Despite the headlines that might suggest otherwise, August proved to be another relatively tame month for domestic equity indices. Increasing tensions between the U.S. and North Korea over nuclear weapons, top CEOs disbanded two business councils after President Trump's failure to condemn racism, and the potential impact from Hurricane Harvey in Texas proved to be noise to equity markets as the S&P 500 Index eked out a 0.31% return for the month. For the most part, rates fell in August and traded near the bottom side of the post trump range. The Barclays Total Return Aggregate Bond Index finished the month up 0.90%.
The collared equity portion of the Trilogy Alternative Return Fund was a positive contributor to performance for the month albeit just slightly as equity indices were just above unchanged for the month. Our equities participated in the rally, and our protective collar employed for protection against bear markets and as a tool to dampen volatility wasn't much of a drag given the only slight move higher in the S&P 500. The contribution effect of this portion of the Fund was 0.10%.
The option income portion of the Fund was the main driver of returns for the month with both the fixed income collateral and option writing portions of this component doing well for the month. Rates falling helped out the relatively high quality low duration fixed income in the portfolio, and the lack of movement in broad equity indices helped out the option writing portion of this Fund. Flat markets are generally good environments for selling options, as many times we are able to buy back options at a lower price than we originally sold them in this type of environment. The contribution effect of this portion of the Fund was 0.61%.
The market movement portion of the Fund was understandably a drag for the month given the lack of a move in equity markets. This portion of the portfolio was a slight drag as we paid premiums for protection against moves meaningfully higher or lower that didn't occur. The contribution effect of this portion of the Fund was -0.09%.
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 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. 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”).
The Barclays Global Aggregate bond Index is an index used by bond funds as a benchmark to measure their relative performance. The index includes government securities, mortgage-backed securities, asset-backed securities and corporate securities to simulate the universe of bonds in the market. The maturities of the bonds in the index are more than one year.
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. 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.
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.
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.