All blog content is for information purposes. Any reference to indivisual stocks, indexes, or other securities as well as all graphs and tables are not recommendation but only referenced for illustration purposes.
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 had a strong month in July posting a gain of +8.9%. This was the 5th best month of 126 months since the launch of the Strategy in early 2010.
Frequency of Returns
The accompanying graph shows the frequency of returns, or number of months within a given performance range, for both the Flex and S&P 500. For example, on the far right of the graph, both the Flex and the S&P 500 have had 2 months (of the last 126) with a return in excess of +10% (“> +10%” graph label). Gains for +5% or more though have been more frequency for the Flex than the S&P 500. At the same time, the number of months when the Flex was down -5% or more, the left side of the graph, were similar to the S&P 500. This is a good combination for the Flex with more big gains and similar big losses.
Strong positive long-term returns, and certainly more big gains than big losses, are the single most desired outcome for the Flex with a very close runner up being the way in which the returns are achieved (not going up and down at the same time). Although both the Flex and the S&P 500 produced strong returns in July, their performance moved in the opposite direction 8 of the 22 trading days of the month as shown in the below graph.
The Flex’s performance behavior, although sometimes seemingly insignificant during a rising market, continues to demonstrate the low correlation of the Flex to the S&P 500 indicating that any downturn in the market would not directly impact the performance of Flex (see July’s blog discussing the neutral allocation between longs and shorts today for more).
The trading during the month was relatively active resulting in several changes in the long positions, or those we want to go higher in price, in the Strategy. The following table shows the long positions added with 5 of the 8 in the technology sector.
The following table shows the long positions closed during the month with only 2 of the 9 being technology stocks. The combined impact of this buying and selling resulted in the Flex’s total technology sector exposure increasing from 21.0% at the end of June to 29.5% by the end of July.