ARMR Outperformed the S&P 500 During July 2020
During the month of July 2020, the Armor US Equity Index ETF’s (ARMR) performance of 6.53% (on a price basis) outperformed the 5.51% of the S&P 500 by 1.02%.
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.
Performance Drivers During July
The Consumer Discretionary sector was the best performing sector in the S&P 500 during the month of July as stocks like Amazon.com (AMZN), which is benefiting from a surge in online shopping during the current pandemic, buoyed its return. ARMR had an overweight position in the sector relative to the S&P 500 during the month of July.
The fund also benefited from an overweight position in the Communications Services and Materials sectors as they each outperformed the S&P 500 in July. Several of the FAANG stocks, which have been beneficiaries of the stay-at-home orders, are in the Communications sector and have also performed well.
Avoiding underperforming sectors, such as Energy, which was the only sector in the red during July, as well as financials, also helped performance in July.
Detracting from the fund’s performance was its overweight position in the Healthcare sector, which modestly underperformed the S&P 500 during July.
Sector Positioning for August
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.
ARMR will be adding allocations to the Consumer Staples, Industrials, and Utilities sector for the month of August. Following the rebalance, ARMR will have allocations to 8 of the 11 S&P 500 sectors. The addition of defensive sectors, such as Consumer Staples and Utilities, as well as reductions in cyclical and growth sectors such as Consumer Discretionary, Materials, and Technology needed to fund those allocations, will increase the overall defensive tilt of the fund.
ARMR outperformed the S&P 500 during July as a result of its sector selection during the month.
Moving forward, a multitude of uncertainties face the market. Coronavirus cases continue to rise in the US, forcing the slowing, and in some cases, the reversal of plans to reopen the economy. Jobless claims, which were beginning to drop, are now rising again. In addition, in approximately three months, the nation will return to the polls to elect a President.
As a result, we believe that a defense equity stance is warranted. ARMR may be an attractive vehicle for investors who are looking for equity exposure but are nervous about near-term market uncertainties.
 Source: Yahoo Finance
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