ALL BLOG CONTENT IS FOR INFORMATIONAL PURPOSES ONLY. ANY REFERENCE TO OR MENTION OF INDIVIDUAL STOCKS, INDEXES, OR OTHER SECURITIES ARE NOT RECOMMENDATIONS AND ARE SPECIFICALLY NOT REFERENCED AS PAST RECOMMENDATIONS OF PATTON WEALTH ADVISORS. ALL GRAPHS, CHARTS, AND TABLES ARE PROVIDED FOR ILLUSTRATION PURPOSES ONLY. EXPRESSIONS OF OPINION ARE ALSO NOT RECOMMENDATIONS AND ARE SUBJECT TO CHANGE WITHOUT NOTICE IN REACTION TO SHIFTING MARKET, ECONOMIC, OR POLITICAL CONDITIONS. IT IS COMMON FOR US TO USE A FUND AS A PROXY FOR AN INDEX OR ASSET CLASS. FOR MORE DETAILS SEE OUR FULL DISCLOSURE HERE.
The following is to provide some insight and perspective on the performance of the Patton Flex Fund for March and more. For more information on the strategy of the Fund, visit our website here.
The Flex Fund is most often recommended as only one component of a Super-Diversified Portfolio. Therefore the information in this blog only pertains to one component of a Super-Diversified portfolio. For more on Super-Diversification, visit our website here.
** Compounded annually net of all fees.
Note: individual investor performance may differ.
The Flex has held up well relative to the S&P 500 year-to-date and other hedge funds through the end of March.
Use of leverage was reduced twice during March, on the 9th and again on the 16th, to the lowest target level of 2 times capital. This is an automatic risk control that triggers during periods of heightened volatility to reduce risk of loss. Read more in a recent blog.
As expected in a declining market as we had in March, the short positions generated a large gain for the Fund and offset the entire loss from the long positions in spite of the Fund’s current long bias (more money invested in long positions than shorts).
Expedia Group (EXPE), the online travel site, is an example of a short position in the Fund. This stock fell -42.9% during the month but did rally mid-month over a 5-day period by +44.3% creating short-term losses and volatility for the Fund but still generating significant profits for the entire month. This is an example of the volatility we must endure to generate the best long-term returns.
Some Longs Went Up
In a month when the S&P 500 lost -12.5%, we would expect our long positions to fall sharply as many did. Fortunately, of the 74 total long positions in the Fund throughout March, 57 were down while 17 generated profits including Rite Aid (RAD), Kroger (KR), Walmart (WMT), and Clorox Company (CLX).
Volatility Lower than S&P 500
The Fund generally has volatility, or change in value from day-to-day, that is about 50% greater than the S&P 500. Since the full deleveraging of the Fund on March 16th, as discussed above, the volatility of the Fund has dropped to just below that of the S&P 500.
For an overview of the market, click here for our blog.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Any specific securities or investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own situation before making any investment decision including whether to retain an investment adviser.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. This content was created as of the specific date indicated and reflects the author’s views as of that date. Supporting documentation for any claims or statistical information is available upon request.
Past performance is no guarantee of future results. Any comments about the performance of securities, markets, or indexes and any opinions presented are not to be viewed as indicators of future performance.
Investing involves risk including loss of principal.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly. For more information on specific indexes please see full disclosure here.
Any charts, tables, forecasts, etc. contained herein are for illustrative purposes only, may be based upon proprietary research, and are developed through analysis of historical public data.
All corporate names shown above are for illustrative purposes only and are NOT recommendations.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Lower-rated securities are subject to greater credit risk, default risk, and liquidity risk.