NAVIGATOR FUND: APRIL 2021 – COMMENTARY LETTER
For the month, Navigator was +0.87% in April and is +2.71% year-to-date.
Market Review
In April, realized volatility continued to drop lower. This was no surprise to the options markets which had an ascending implied market volatility term structure coming into the month – meaning traders expected higher volatility as the calendar turns to late spring and summer.
However, April had notable movement in the indices that track out-of-the-money put buying versus out-of-the-money call selling. For example, the S&P 500 CBOE SKEW Index was close to all-time highs at the end of April. This index essentially measures the demand for downside put protection relative to the upside supply of call options. In short, it offers the market’s view of downside risk versus upside opportunity. There’s some fear creeping back of a large downside move.
Further, correlations of nearly all asset classes remain relatively high. Diversifying agents within a portfolio are simply not easy to find in liquid instruments outside expensive put options or using VIX futures hedges. Equities, bonds, and high yield look more similar than different in their daily patterns. This is a trend that has been well-established and is unsurprising with yields near their all-time lows.
Despite these risks for broader markets, we believe the current Navigator strategy has the robustness to meet an unpredictable market even with high correlations of asset classes in a large sell-off. We believe the current Navigator strategy will continue to have a relatively low beta to equities and bond markets. The strategy simply seeks absolute positive return with an independent sequence of return to broader markets. Moreover, we do this by trading liquid contracts to allow for dynamic re-positioning as markets and risks change.
Sincerely yours,
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Share prices and investment returns fluctuate and an investor’s shares may be worth more or less than original cost upon redemption. For performance data as of the most recent month-end please call 1-866-264-8783.
Fund Objective
The Navigator Fund seeks capital appreciation and preservation with lower volatility throughout market cycles. The resulting portfolio targets a high correlation to the S&P 500 in bull markets and a lower, or negative, correlation in bear markets.
Standardized performance as of (03/31/2020) Fund Inception (02/01/2002)
| 1 Year | 5 Year | 10 Year | Since Inception | |
| UNAVX | 14.52% | 7.30% | 6.97% | 10.97% |
| S&P 500 Index | 56.35% | 16.28% | 13.90% | 9.09% |
Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-264-8783. Returns over one year are annualized. The Gross and Net expense 2.36% and 2.01%. The advisor has contractually agreed to limit expenses to 1.99% of the average net assets of the Fund through 7/31/2021.
DEFINITIONS:
CBOE SKEW Index – A measure of the perceived tail risk of the distribution of S&P 500 investment returns over a 30-day horizon.
The S&P 500 Index is an unmanaged composite of 500 large capitalization companies. This index is widely used by professional investors as a performance benchmark for large-cap stocks. You cannot invest directly in an index.
SYMBOL: UNAVX
