Does Your Portfolio Have a Special Teams Unit for When the Offense (Stocks) and Defense (Bonds) Let You Down?
Learn How Adding the Catalyst/Millburn Hedge Strategy Fund’s (MBXIX) Has Some Investors Seeing Long-Term Success.
In the NFL, it’s often the quarterback or defensive captain who gets the headlines, praise, and awards. In investing, we’d like to offer stocks as a comparison to the offensive unit, and bonds as the defense. Seemingly all investors know about investing in those asset classes. But allow us to introduce to you the importance of having a reliable “special teams” unit for when the offense and defense can’t pull through – in this case, it’s the Catalyst/Millburn Hedge Strategy Fund (MBXIX).
When stocks and bonds fight it out and can’t gain any ground, like what investors saw in 2022 as both asset classes declined, having a reliable but less-frequently-used option can make all the difference.
In professional football, special teams account for about 17% of total plays, but those moments can be crucial and shift momentum, especially in a big game. We believe MBXIX can be this important addition to your portfolio, helping drive momentous changes in your portfolio during market downturns (as outlined below).
MBXIX – A Special Teams Unit That Has Helped Portfolios During Bull and Bear Markets
Source: Bloomberg LP and Catalyst Capital Advisors LLC. Data from 01/01/1997 to 12/31/2022. Years when the S&P 500 was negative include: 2000-2002, 2008, 2018, and 2022. Years when the S&P 500 was positive include: 1997-1999, 2003-2007, 2009-2017, and 2019-2021.
There is no assurance that the Fund will achieve its investment objective. Investments in mutual funds involve risks. Performance is historic and does not guarantee future results.
How MBXIX Invests:
So what makes MBXIX a “special teams” unit? For one, because of MBXIX’s portfolio composition, investors’ notional exposure to markets is higher than it would be through other traditional investments. For every dollar invested in MBXIX, approximately fifty cents go to the equity ETF component and approximately seventy cents go to the futures portfolio. More than 100% notional exposure is possible because the collateral required for futures is less than the exposure that is provided. This distinct feature of MBXIX means that investors are more than adequately exposed to an asset class that offers them protection during down-market periods.
Any special teams coach worth their mettle would tell you that their units shouldn’t just be good at containing risk like during a kickoff, but should also be effective at scoring points during field goal attempts and punt returns. So, it’s important to note that MBXIX hasn’t only protected investors when the market is down. Since MBXIX’s inception in 1997, the Fund has seen only three negative years in 26 and has outperformed the broader market with less overall volatility.
MBXIX vs. S&P 500 vs. a 60/40 Portfolio Since Inception
Source: Bloomberg LP and Catalyst Capital Advisors LLC. Monthly return data from 01/01/1997 to 09/30/2023. Graph presented in logarithmic scale. 60/40 Portfolio represented by 60% allocation to the S&P 500 TR Index and 40% allocation to the Bloomberg Agg TR Index (rebalanced monthly). Past performance does not guarantee future results and there is no assurance that the Fund will achieve its investment objective.
Your Skilled ‘Special Teams Coordinator’ – The Millburn Ridgefield Corporation
The impressive returns produced by MBXIX are the result of complex and constantly developing machine learning utilization. The Millburn Ridgefield Corporation, subadvisors of MBXIX, have implemented a machine learning process in the Fund to effectively model the current market based on historical data and take positions based on real-time information. MBXIX’s machine learning approach can help eliminate human bias in decision-making, resulting in the potential to adapt to ever-changing market conditions and long-term success.
With MBXIX, investors not only gain access to a top-notch special teams unit, but they also gain access to a top coordinator in the Millburn Ridgefield Corporation. Millburn has been at the forefront of developing systematic investment methods and has utilized their research in the continual improvement of MBXIX. This commitment to using a sophisticated quantitative investment approach has resulted in a manager that we believe stands out from the competition.
Summary and Key Characteristics:
- MBXIX combines a long-only equity ETF portfolio with a long/short futures component with the objective of protecting investors against equity drawdowns while simultaneously being able to participate in market booms.
- The Fund has been positive 23 out of 26 years and provided investors with a crucial “special teams unit” for when both offensive (equities) and defensive (bonds) strategies are lacking, such as what we saw in 2022.
- Machine learning has contributed to the success of MBXIX by creating a systematic approach that has helped to eliminate human bias. As more time passes, additional data will be available to MBXIX’s models, potentially increasing the Fund’s capabilities.
- The Millburn Ridgefield Corporation, subadvisor of MBXIX, has experience trading through multiple market cycles dating back more than five decades. This level of experience and commitment to quantitative analysis sets Millburn apart from other managers.
Performance (%) Ending:2023-09-30T00:00:00
Annualized if greater than a year
|Share Class||1 Month||3 Months||6 Months||YTD||1 Year||3 Years Annualized||5 Years Annualized||10 Years Annualized||Since Inception Annualized|
|Class A w/Sales Load||-1.05%||0.94%||3.66%||-1.00%||0.31%||10.95%||5.91%||N/A||7.97%|
*Inception: 1/1/1997 (I Share), 12/28/2015 (A & C Shares)
The Fund’s maximum sales charge for Class “A” shares is 5.75%. Investments in mutual funds involve risks. Performance is historic and does not guarantee future results. Investment return and principal value will fluctuate with changing market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month-end performance information, please call the fund, toll free at 1-866-447-4228.
There is no assurance that the Fund will achieve its investment objective. You cannot invest directly in an index and unman- aged index returns do not reflect any fees, expenses or sales charges. Performance shown before December 28, 2015 is for the Fund’s Predecessor Fund (Millburn Hedge Fund, L.P.). Gross expense ratios for share classes A, C, and I are 2.27%, 3.02%, and 2.02%, respectively.
Past performance is not a guarantee of future results.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Catalyst Funds. This and other important information about the Fund can be obtained by calling 866-447-4228. The Catalyst Funds are distributed by Northern Lights Distributors, LLC, member FINRA/SIPC. Catalyst Capital Advisors, LLC is not af- filiated with Northern Lights Distributors, LLC.
Important Risk Considerations:
Investing in the Fund carries certain risks. The Fund will invest a percentage of its assets in derivatives, such as futures and options contracts. The use of such derivatives and the resulting high portfolio turnover may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities and commodities underlying those derivatives. The Fund may experience losses that exceed those experienced by funds that do not use futures contracts, options and hedging strategies. Investing in commodities markets may subject the Fund to greater volatility than investments in traditional securities. Currency trading risks include market risk, credit risk and country risk. Foreign investing involves risks not typically associated with U.S. investments. Changes in interest rates and the liquidity of certain investments could affect the Fund’s overall performance. The Fund is non-diversified and as a result, changes in the value of a single security may have significant effect on the Fund’s value. Other risks include U.S. Government securities risks and investments in fixed income securities. Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by the Fund. Furthermore, the use of leveraging can magnify the potential for gain or loss and amplify the effects of market volatility on the Fund’s share price. The Fund is subject to regulatory change and tax risks; changes to current rules could increase costs associated with an investment in the Fund. These factors may affect the value of your investment.
Performance shown before December 28, 2015 is for the Fund’s Predecessor Fund (Millburn Hedge Fund, L.P.). The prior performance is net of management fees and other expenses including the effect of the performance fee. The Predecessor Fund had an investment objective and strategies that were, in all material respects, the same as those of the Fund, and was managed in a manner that, in all material respects, complied with the investment guidelines and restrictions of the Fund. From its inception through December 28, 2015, the Predecessor Fund was not subject to certain investment restrictions, diversification requirements and other restrictions of the 1940 Act or the Code, which if they had been applicable, might have adversely affected its performance. In addition, the Predecessor Fund was not subject to sales loads that would have adversely affected performance. Performance of the predecessor fund is not an indicator of future results.
Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges
There is no guarantee that any investment strategy will achieve its objectives, generate profits, or avoid losses.