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ARMR April 2020 Recap

May 7, 2020

During April 2020, the Armor US Equity Index ETF (ARMR) declined 3.31% (on a price basis) while the S&P 500 rose 12.68%. [1]Since inception (02/11/20), the fund has had a return of -22.05% versus the -13.26% return of the S&P 500.

Performance to the most recent month-end can be found by clicking here. Performance data quoted represents past performance and is no guarantee of future results.

The Portfolio During April
As a result of the nearly 34% decline in the S&P 500 from 2/19/20 – 3/23/20, the fund’s Market Performance Indicator (MPI) shifted the portfolio to U.S. Treasuries when it was rebalanced at the end of March. This allocation to U.S. Treasuries hurt the fund’s performance in April as the equity market advanced strongly from its bottom as investors likely started to anticipate a gradual reopening of the U.S. economy and the potential for positive news on coronavirus treatments. While we were disappointed with April’s performance relative to the S&P 500, the MPI performed as it should in the midst of market turmoil by moving the portfolio to what has historically been considered to be a safer asset class, U.S. Treasuries.

Portfolio Positioning for May
As noted above, the index which underlies the ARMR ETF uses a proprietary Market Performance Indicator (MPI) to estimate which sectors may offer strong, long-term performance potential with lower expected downside risk. The MPI uses a sector’s moving average price as a basis for this factor. When a sector is trading above (below) its moving average, it is included (excluded) in the index.

For the month of May, the index is invested in the following sectors:

  • Consumer Discretionary
  • Communication Services
  • Healthcare
  • Technology

Consumer Discretionary stocks, which experienced sharp declines amidst the coronavirus-induced economic shutdown, rebounded strongly during April as investors began looking at potential economic improvement in the second half of the year.

We would expect healthcare stocks to perform well as people continue to need medical care and supplies, even in recessions. Additionally, healthcare companies have the potential to do well if they develop treatments and vaccines that stem the coronavirus outbreak.

Communication Services and Technology stocks may be poised to benefit from the shift to online work, learning, and shopping necessitated by global shelter-in-place orders. The shift to online was already beginning before the coronavirus outbreak and the pandemic likely accelerated that trend.

While the fund underperformed during April, we believe that ARMR is attractively positioned to benefit from current market conditions and economic trends.

The outbreak of COVID-19 has negatively affected the worldwide economy, individual countries, individual companies and the market in general. The future impact of COVID-19 is currently unknown, and it may exacerbate other risks that apply to the Fund. Short-term performance may often reflect conditions that are likely not sustainable, and thus such performance may not be repeated in the future.

[1] Source: Yahoo Finance

Carefully consider the Fund’s investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s prospectus and Summary Prospectus, which may be obtained by visiting https://armoretfs.com/documents. Read the prospectus and Summary Prospectus carefully before investing.

Foreside Fund Services, LLC, distributor.

Investing involves risk, including possible loss of principal. The Fund’s return may not match or achieve a high degree of correlation with the return of the Index. To the extent the Fund’s investments are concentrated in or have significant exposure to a particular issuer, industry or group of industries, or asset class, the Fund may be more vulnerable to adverse events affecting such issuer, industry or group of industries, or asset class than if the Fund’s investments were more broadly diversified. Issuer-specific events, including changes in the financial condition of an issuer, can have a negative impact on the value of the Fund.

A new or smaller fund is subject to the risk that its performance may not represent how the fund is expected to or may perform in the long term. In addition, new funds have limited operating histories for investors to evaluate and new and smaller funds may not attract sufficient assets to achieve investment and trading efficiencies.

Shares are bought and sold at market price (closing price) not net asset value (NAV) and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00pm Eastern Time (when NAV is normally determined) and do not represent the return you would receive if you traded at other times.