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 Strategy closed September up +1.0% in spite of the S&P 500 delivering its worst month since March down -3.8%. This serves as yet another example of how the performance of the Flex is very much independent of the market’s direction. The accompanying graph showing September’s day-by-day performance further highlights the same. As you can see, both the Flex and S&P 500 declined sharply early in the month. Later in the month the Flex staged a stronger recovery than the S&P was able to generate.
Year-to-date the Flex is up +6.8% and the S&P 500 has gained +5.6%. A more applicable benchmark though for the Flex is an index of long/short U.S. equity hedge funds, the industry category assigned to the Flex, called the HFRX Equity Hedge Index. This index is down -3.3% year-to-date.
The below graph shows the year-to-date performance of the Flex compared to both the hedge fund index and a variety of equity-oriented asset classes all with a similar risk profile as the Flex. The Flex and S&P 500 are the only asset among this group that are higher while all others are down, a few down somewhat meaningfully, for the year.
As I discussed in a separate blog, September was the first month in a dozen when value stocks outperformed growth stocks. This performance behavior generally put downward pressure on the performance of our Flex Strategy given the style, assigned by Standard & Poor’s, of our existing long and short positions. For example, as the below table shows, of the long positions, those that we want to go up in price, 25 are growth stocks (poorer performing style in September) while only 7 are value stocks (better performing style in September). The opposite is true for our short positions which put similar downward pressure on our overall performance. In spite of this headwind, the Flex gained for the month.
The composition of the holdings changes regularly, of course, with stocks being traded on nearly a daily basis resulting in overall style changes. That said, the overall changes tend not to be swift but evolve over weeks and months when various trends change in the markets.
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.