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Stadion Trilogy Alternative Return Fund Commentary August 2019

August was an interesting month for global markets as the ongoing trade war with China continues to burden equity markets. Fixed Income, especially U.S. treasuries, rallied most likely as the result of two things: they are considered "safe haven" assets and were further buoyed by the Federal Open Market Committee starting to lower rates in the face of ongoing fears of recession. A 2-10 inversion (i.e. the point at which U.S. 2-year Treasury Note begins to yield more than the 10-Year note) also occurred this month. This is a much-watched signifier of potential recession because this doesn't occur in healthy credit markets that are functioning normally. The total return for the S&P 500 Index was -1.58% for August and +2.59% for the Bloomberg Barclays US Aggregate Bond Index.

 The collared equity portion of the fund did well in August given the move lower in broad equity markets. Our dividend paying flight-to-quality exposure to stocks did well in August on a relative basis to the S&P 500 Index. Our collar, which we employ as risk-mitigation against large market selloffs also added value during August as the broader markets were down. The contribution effect of this portion of the fund was +.06%.

  The option income portion of the fund did very well in August. The fixed income contributed on a stand-alone basis as rates dropped for the month. The option selling strategy also did well in August as higher volatility has led to higher selling prices for options that we short, and the equity market gyrating around a bit has given us opportunities to buy back options at lower prices. The contribution effect of this portion of the fund was +.96%

 The market movement portion of the fund was a detractor in August as the longer-term trend of the S&P 500 (higher) reversed course. This bucket does best during pro-longed trends in equity markets. Unfortunately, the last 12 months has been fairly flat despite head fakes in both directions. We saw a head fake lower in Q4 of 2018 and then tested the higher trend in both April and July. The contribution effect of this portion of the fund was -.26%

To view the most recent performance for the Stadion Trilogy Alternative Return Fund, click here.

Past performance is no guarantee of future results. Investments are subject to risk and any of Stadion’s investment strategies may lose money. The investment strategies presented are not appropriate for every investor and financial advisors should review the terms and conditions and risks involved. Stadion’s actively managed portfolios may underperform during bull markets. Some information contained herein was prepared by or obtained from sources Stadion believes to be reliable. There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change.

The U.S. 2-Year Treasury Note is a debt obligation issued by the United States government that matures in 2 years.

The 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. A 10-year Treasury note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity.

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 Federal Open Market Committee is a committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.

The Bloomberg Barclays Global Aggregate Bond Index is a flagship measure of global investment grade debt from twenty-four local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.

A collar is an option strategy that limits the range of possible positive or negative returns on an underlying security to a specific range.

One cannot invest directly in an index.

The Report’s 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.

Risks

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.

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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.