< Back to News & Views

ARMR Outperformed the S&P 500 During July 2020

August 6, 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%.[1]

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,[2] 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.

Summary
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.


[1] Source: Yahoo Finance
[2] Facebook, Amazon, Apple, Netflix, Google

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.