Updating Stillpoint Performance through March 2020

In a Stillpoint blogpost from March 21, 2020, we looked at how momentum investing can protect an investment portfolio as a bull market shifts into a bear market. For 2020, however, “shift” is probably putting it mildly. The selloff from late February to late March 2020 was so rapid and extreme that it raised comparisons with the historic selloffs in October 1929 and 1987.

Since that blogpost, how has the Stillpoint portfolio performed relative to the alternatives, such as the S&P500 index, a 2045 Vanguard retirement-date fund, and a 60/40 portfolio consisting of 60% diversified stocks and 40% 10-year U.S. Treasuries? Furthermore, what was the performance for March 2020 and the six-month period from October 2019 to March 2020 that the recent blogpost examined?

Because of the strong rally in stocks at the end of March, the Stillpoint portfolio finished the month down only 1.2%, gaining substantial ground from its decline of 7.3% as of the date of the prior blogpost, March 21.

That is a strong statement for the benefits of Stillpoint’s use of momentum when stocks had one of their worst months ever. Even with the end-of-March rally in stocks, the S&P500 finished the month down 12.5%, and the Vanguard 2045 target-date retirement even fared worse, off 13.3%. The 60/40 portfolio fared better, down 8.9%, but had nowhere near the performance of the Stillpoint momentum retirement portfolio.

Below is a look at how some of the relevant funds performed in March 2020 on a total return basis:

March 2020 Performance.png

The performance results over the six-month period ending March 31, 2020 show a similar pattern. The Stillpoint momentum portfolio actually produced a gain of 1%, while the alternatives showed significant losses. The S&P500’s total return was down 12.2% over this period, while the Vanguard 2045 target-date retirement fund was off more (13.3%). As you might expect, the 60/40 portfolio fared better, but was still down 6.7% for these six months.

Six month performance 2019-2020 complete.png

Momentum portfolios typically have an edge over stock indexes and buy-and-hold portfolios when bear market returns are included in performance. Investors who only consider bull market performance could be in for a major shock when a bear market emerges, as one clearly has in 2020.

 

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Important Disclosures:  While Stillpoint Capital’s investment strategies are based on sound economic and investment principles, there is no guarantee client objectives will be met. Investment outcomes are always uncertain.
     Backtested performance is hypothetical and does not reflect trading in actual accounts. As such, backtests are provided for informational purposes only to indicate historical performance had particular investments strategies been utilized over the relevant time frame. Backtested performance does not represent actual performance and should not be interpreted as an indication of such performance. Backtested returns do not represent the performance results of actual trading and are calculated through the retroactive application of the advisor's portfolio configuration, designed with the benefit of hindsight. Since backtested performance results do not represent actual trading, they may not reflect the impact that material economic and market factors might have had on the decision-making of the adviser, if the adviser were managing the client assets.
     No representation is being made that the adviser’s strategy will or is likely to achieve profits or losses like those shown. In fact, there are frequently significant material differences between backtested performance results and performance results subsequently achieved by following a strategy. In addition, backtested performance does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or adhere to a trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of backtested performance results and all of which can adversely affect actual trading results.
     The results portrayed reflect the reinvestment of dividends, interest and other income, as appropriate. In actual portfolios rebalancing occurs at no set time, and such actions are dependent on both market conditions and individual client liquidity inflows and outflows, along with the cost impact of such transactions on the overall portfolio.
     As with any investment strategy, there is potential for profit as well as the possibility of loss. Stillpoint Capital does not guarantee any minimum level of investment performance or the success of any client account or investment strategy. All investments involve risk and investment recommendations will not always be profitable. Past performance does not guarantee future results. Backtested results do not guarantee future results.
     Results are compared to the performance of the S&P 500 Index ETF (SPY) and other benchmarks for informational purposes only. The adviser’s investment program does not mirror the S&P 500 Index and the volatility of the adviser’s investment program may be materially different. The securities or other instruments included in the S&P 500 Index are not necessarily included in the adviser’s portfolio and criteria for inclusion in the S&P 500 Index are different than those for investment by the adviser. The performance of the S&P 500 Index ETF was obtained from published sources believed to be reliable, but which are not warranted as to accuracy or completeness. All references to the S&P 500 Index ETF SPY are to the total return form of the ETF, meaning the impact of dividends is included. Unless noted otherwise, the returns of indices presented herein do not reflect fees or transaction costs, nor net dividends, if any. A description of each index follows: The S&P 500 Index, a diversified index that includes the stocks of 500 U.S. listed, large capitalization companies in major industries.
     Past performance, including hypothetical past performance, is not indicative of future performance. There can be no assurance that the adviser will achieve client objectives. Any performance information, market analysis or data or other information is not warranted by Stillpoint Capital as to completeness or accuracy, express or implied, and such information is subject to change without notice. Stillpoint Capital’s investment strategies may change from time to time based on market conditions and enhancements to its investment methods and strategies without further notice.
     This website and the information contained herein are for informational purposes only and do not constitute a complete description of our investment services, funds, or strategies. The data in this website have been prepared by Stillpoint Capital and have not been reviewed, compiled, or audited by an independent public accountant. The views expressed on this website represent the current, good faith views of the authors at the time of publication. Please be aware that these views are subject to change at any time and without notice of any kind. Stillpoint Capital assumes no duty and does not undertake to update these views or any forward-looking statements, which are subject to numerous assumptions, risks, and uncertainties, which change over time.
     All material presented herein is believed to be reliable, but we cannot attest to its accuracy. The information contained herein (including historical prices or values) has been obtained from sources that Stillpoint Capital considers to be reliable; however, Stillpoint Capital makes no representation as to, or accepts any responsibility or liability for, the accuracy or completeness of the information contained herein, or any decision or action taken by you or any third party in reliance upon the data. Some results are derived using historical estimations from available data.
     Readers are urged to check with tax advisors before making any investment decisions. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. All prices and yields contained in this report are subject to change without notice. This information is based on hypothetical assumptions and is intended for illustrative purposes only.
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