NAVIGATOR FUND: JUNE 2021 – COMMENTARY LETTER
For the month of June, the Fund was +0.43%.
Market Review
In June, equity markets hit the summer doldrums with volatility dropping to the lowest level since the pre-pandemic days of mid-February 2020. Equities were mixed globally with growth stocks outperforming value stocks as inflationary fears subsided.
In fixed income markets, the Fed announced it was holding rates steady in June. The yield curve flattened as forecasters generally expected at least one hike before 2024, and more likely two. This was a change from early Fed indications of no hikes until 2024.
From a market dynamics standpoint, equity moves were historically typical of summer trading. Low volumes and lower volatility. However, one important metric we follow is the amount of “tail risk” (or crash risk) investors are factoring into options markets. In the case of June 2021, the relative level of option put pricing to option call pricing was at its highest level ever recorded. Most of this protection buying is likely attributed to hedging the rapid rally. In short, there is some fear of a large down move in equity markets.
As more investors chase “high beta” strategies in the Fund industry generally, we believe the Navigator strategy will offer an opportunity to perform positively. Today’s historically record-high equity and bond valuations may become less interesting to investors who do not want to suffer very large drawdowns. We believe Navigator may offer an opportunity to invest with less chance of large drawdowns than current equity prices offer.
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 the original cost upon redemption. For performance data as of the most recent month-end please call 1-866-264-8783.
Fund holdings and/or sector allocations are subject to change at any time and are not recommendations to buy or sell any security.
Standardized performance as of (06/30/2021) Fund Inception (02/01/2002)
| 1 Year | 5 Year | 10 Year | Since Inception | |
| UNAVX | 2.03% | 6.34% | 6.51% | 10.44% |
| S&P 500 Index | 40.79% | 17.65% | 14.84% | 9.33% |
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 7/31/2022.
Definitions:
Tail Risk: A form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution. Tail risks include events that have a small probability of occurring, and occur at both ends of a normal distribution curve.
Beta: Primarily used in the capital asset pricing model (CAPM), is a measure of the volatility–or systematic risk–of a security or portfolio compared to the market as a whole. A high beta stock or index would correspond closely to the market as a whole.
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
6473-NLD-09012021