The month of May continued many of the trends that have defined this year so far with very low equity volatility and a continuation of the range that rates have been in going back to the beginning of the year. As such, returns were fairly tame domestically, as the S&P 500 rose 1.41% for the month and the Bloomberg Barclays US Aggregate Index returned 0.77%.
In May, we saw the flight to quality equities in the Stadion Trilogy Alternative Return Fund lag the broader equity indices with technology and growth stocks leading the way. The protective collar that we employ in the strategy to dampen volatility and protect from bear markets was naturally a drag given the up-market environment. The contribution effect of the collared equity portion of the Fund was -0.36%.
The option income portion of the Fund had a decent month, contributing 0.29%. The bulk of this return came from the fixed income funds as rates moved slightly lower, though not by much. The option writing portion of the Fund was mostly flat for the month given the low levels of implied volatility and movement in the markets.
The continued trend higher helped the market movement portion of the Stadion Trilogy Alternative Return Fund in May. While the put spread that serves as protection was a natural drag during the month, it was more than offset by the long calls and alternative long position in the market movement portion of the Fund. The contribution effect of this portion was 0.61%.
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. Bloomberg Barclays US Aggregate 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. 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 May 31, 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.