ARMR April 2020 Recap
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%. 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
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.
 Source: Yahoo Finance