Fund Performance (6.30.2024)
|
Fund |
1 Month |
3 Month |
YTD |
1 Year |
3 Year (Ann) |
5 Year (Ann) |
10 Year (Ann) |
Since Inception* Gross/Net (Ann) Expense Ratio 1 |
|
|
Guggenheim Directional Allocation Fund Class A (MUTF:TVRAX, With Load) |
-1.45% |
-2.59% |
8.62% |
17.50% |
3.05% |
7.28% |
7.17% |
9.73% |
1.58% / 1.47% |
|
Guggenheim Directional Allocation Fund Class A (No Load) |
3.46% |
2.26% |
14.02% |
23.39% |
4.73% |
8.33% |
7.80% |
10.27% |
1.58% / 1.47% |
|
Guggenheim Directional Allocation Fund Class C (MUTF:TVRCX, With Load) |
2.37% |
1.05% |
12.68% |
21.65% |
4.06% |
7.61% |
7.06% |
9.53% |
2.21% / 2.08% |
|
Guggenheim Directional Allocation Fund Class C (No Load) |
3.37% |
2.05% |
13.68% |
22.65% |
4.06% |
7.61% |
7.06% |
9.53% |
2.21% / 2.08% |
|
Guggenheim Directional Allocation Fund Class P (MUTF:TVFRX) |
3.42% |
2.23% |
14.07% |
23.49% |
4.83% |
8.42% |
7.87% |
10.36% |
1.47% / 1.33% |
|
Guggenheim Directional Allocation Fund Institutional Class (MUTF:TVRIX) |
3.48% |
2.33% |
14.20% |
23.84% |
5.11% |
8.69% |
8.14% |
10.63% |
1.22% / 1.08% |
|
Dow Jones U.S. Large-Cap Total Stock Market Index SM |
3.44% |
3.80% |
14.71% |
24.44% |
8.93% |
14.75% |
12.64% |
14.41% |
– |
|
Source: Guggenheim Partners * Performance results represent since inception date of the fund (06.18.2012). Performance displayed represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original cost. Current performance may be lower or higher than the performance data quoted. For up-to-date fund performance, including performance current to the most recent month end, please visit our website at GuggenheimInvestments.com. Load performance reflects maximum sales charges or contingent deferred sales charges (CDSC) as applicable. A Class shares have a maximum sales charge of 4.75%. Eflective 05.09.2016 the A Class maximum front-end sales charge was changed from 5.75% to 4.75%. For performance periods that begin prior to 05.09.2016, a 5.75% load was used and for performance periods that begin 05.09.2016, a 4.75% load was used. A 1.00% deferred sales charge will be imposed on purchases of $1,000,000 or more on fund shares purchased without a front-end sales charge that are redeemed within 18 months of purchase. C Class shares have a maximum CDSC of 1% for shares redeemed within 12 months of purchase. Unless otherwise noted, data is as of 6.30.2024. Data is subject to change on a daily basis. Partial year returns are cumulative, not annualized. Returns reflect the reinvestment of dividends. The referenced index is unmanaged and not available for direct investment. Index performance does not reflect transaction costs, fees, or expenses. Index data source: S&PDJI. 1 The advisor has contractually agreed to waive fees and expenses through 2.1.2025 to limit the ordinary operating expenses of the fund. See the prospectus for more information about fees and expenses. Read the fund’s prospectus and summary prospectus (if available) carefully before investing. It contains the fund’s investment objectives, risks, charges, expenses, and other information, which should be considered carefully before investing. Obtain a prospectus and summary prospectus (if available) at GuggenheimInvestments.com. |
Fund Overview
- Designed for investors seeking a portfolio of high Required Business Performance (RBP®) Probability stocks combined with a disciplined market outlook overlay aimed at modulating equity market risk through changing market cycles.
- Able to allocate up to 100% in cash to maximize potential asset protection.
- Invests in U.S. large-capitalization companies believed to have a high RBP® Probability.
- Systematically rebalances exposure to various combinations of the Guggenheim Directional Indexes SM(RBP® Large-Cap Aggressive, Market, & Defensive) and cash, in response to changing economic, consumer sentiment, and market momentum indicators.
Portfolio Positioning
The Directional Allocation Fund moved to a 50% Defensive/50% Market allocation during its June 2024 rebalance, down from a 100% market allocation. Market Momentum was still comfortably positive, as equities were up again for the quarter, but the Leading Economic Index (LEI) kept deteriorating and Consumer Confidence generally faltered. As a result, only one of the primary indicators was positive.
Economic Conditions
The Conference Board Leading Economic Index (LEI) decreased by 0.5 percent to 101.2 in May, following a 0.6 percent decrease in April, thus continuing its downward path after the brief respite at the beginning of the year. The weaknesses in the index still suggest headwinds to growth for the year. The index is down 2 percent for the six-month period from November 2023 to May 2024, a smaller decrease than the 3.4 percent decline over the previous six-month period. The largest negative contributions came from the ISM Index of New Orders, building permits and consumer expectations. Positive contributions came from weekly hours worked in manufacturing and stock prices. With its latest decrease, the index is still below its six-month simple moving average (SMA) of 102.25.
Consumer Sentiment
The most recent Consumer Confidence Index (‘CCI’), released in June, saw a decline to 100.4, down from 101.3 in May, following an increase in the previous month. While the assessment of current conditions slightly improved, especially on the labor market front, consumers generally felt more pessimistic about future income and business conditions. Although inflation expectations were slightly down, there remain concerns about high prices, as well as the US political environment. Purchasing plans for durable goods were overall little changed. With its latest decrease, the Index is still below its 12-month SMA of 104.43.
Market Momentum
After hitting new highs in March, the equity markets had a rough start for the quarter, as the Dow Jones U.S. Large-Cap Total Stock Market Index (the “index”) returned -4.22 percent in April, the first negative month after five consecutive monthly gains. Evidence of sticky inflation and resilient economy weighed on the outlook, causing downside revisions on expectations of Federal Reserve’s rate cuts this year. However, better-than-feared earnings, as well as a jobs report in early May indicating a cooling but not weak labor market, provided welcome news. Further bolstered by a more benign inflation reading, equities rallied, and the index returned 4.76 percent for the month of May. Going into June, the market shrugged a relatively hawkish rates’ projection for 2024 from the Fed and rallied further, posting another positive monthly return. The index returned 3.80 percent for the quarter, closing at 184,286.92 on June 28, 2024, above its 250-day SMA of 160,922.36.
Fund Attribution
For the quarter ended June 30, 2024, the Guggenheim Directional Allocation Fund Class A (load waived) underperformed its benchmark, the Dow Jones U.S. Large-Cap Total Stock Market Index, by 154 basis points, returning 2.26 percent vs. 3.80 percent for the benchmark.
Stocks posted another quarter of solid performance with the S&P 500 (SP500, SPX) rising 4.28 percent on a total return basis. The S&P has now gained in six of the last seven quarters and has produced a total return of 56.85 percent from the trough reached in October 2022. Gains during the second quarter were driven by moderating inflation, strong gains from the technology sector reflecting optimism around artificial intelligence, better-than-feared earnings growth, and increased odds the Federal Reserve (Fed) is on track to reduce interest rates later this year.
Despite the gains in the headline indices, below the surface things were more mixed with six of the S&P sector groups posting losses during the quarter and five posting positive returns. The Technology sector posted the strongest performance, gaining 13.81 percent followed by communication services (+9.38 percent) and utilities (+4.66 percent). On the flipside, cyclical sectors posted the weakest performance with the materials sector falling 4.50 percent and the industrials sector losing 2.90 percent.
While the economic growth has shown some pockets of weakness, the overall economy is far from weak, and economists are projecting full year real GDP growth to be 2.3 percent in 2024. Inflation continues to moderate. After hitting a speedbump during the first quarter, inflation data returned to its downward path during the second quarter, even though it is still tracking above the Fed’s 2 percent inflation target.
Moderating inflation and some signs of softness starting to show in the labor market should give Fed officials enough cover to begin the process of easing policy. The Fed is likely to begin telegraphing rate cuts and use the annual Jackson Hole symposium in late August as a venue to set the stage for a cut at the September FOMC meeting.
According to consensus expectations from Bloomberg, earnings are forecast to grow about 10 percent this year and 14 percent in 2025. In a perfect world, all else being equal, in the long run stocks should closely track their underlying earnings growth.
From an equity standpoint, after seeing a concentrated subset of seven stocks drive more than 60 percent of total S&P 500 gains in 2023, this phenomenon has continued in 2024, with the Magnificent 7 accounting for roughly two-thirds of the aggregate S&P 500 market gains year-to-date (and Nvidia on its own representing almost 30 percent of the market’s advance through the midway point of the year). This has helped push several major indices to new or near all-time highs at the end of the second quarter.
The still less-than-ideal market breadth (the number of advancing stocks vs. declining stocks) suggests some tactical caution in the near term. Election-year seasonality also tends to come into play at this stage, although reelection years have historically been rewarding to investors, as incumbents generally have the incentive to keep voters happy and the economy in as strong of a position as possible. The macroeconomic fundamentals remain supportive, and overall this should continue to be a friendly environment for risk assets.
The model underlying the Directional Allocation Strategy continues to recognize economic and market conditions. The Directional Allocation overlay seeks to systematically determine an equity allocation based on a combination of objective indicators. The reading of these indicators as of the rebalance snapshot date warranted a move to a relatively more defensive stance in the near term.
As always, going forward, the underlying economic and market indicators will be monitored for changes that impact the allocation process.
The highest 20 percent of stocks by beta within the Dow Jones U.S. Large-Cap TSM Index Universe underperformed the lowest 20 percent of the stocks by beta within the same Universe during the quarter ended June 30, 2024.
The highest RBP® Probability companies outperformed (+3.22 percent) the lowest RBP® Probability companies within the Dow Jones Dow Jones U.S. Large-Cap Index Universe for the quarter.
As the fund underperformed its benchmark during Q2 2024 by 154 basis points, the following factors affected performance the most.
Below are the top contributors and biggest detractors to fund’s relative performance during Q2 2024.
|
Contributors |
Detractors |
|
Alphabet Inc. (GOOG) |
NVIDIA Corp. (NVDA) |
|
Broadcom Inc. (AVGO) |
Globe Life Inc. (GL) |
|
NetApp Inc. (NTAP) |
Dexcom Inc. (DXCM) |
Top 10 Holdings (6.30.2024)
|
Microsoft Corp (MSFT) |
8.04% |
|
Alphabet Inc Class C (GOOG,GOOGL) |
5.31% |
|
Nvidia Corp |
5.08% |
|
Apple Computer Inc (AAPL) |
5.02% |
|
Meta Platforms Inc-Class (META) |
3.38% |
|
Amazon.com Inc (AMZN) |
3.04% |
|
Broadcom Ltd (AVGO) |
2.43% |
|
JP Morgan Chase & Co. (JPM) |
2.30% |
|
Eli Lilly (LLY) |
2.05% |
|
Mastercard Inc-Class A (MA) |
1.97% |
|
Total (% of Net Assets) |
38.62% |
|
Performance displayed represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original cost. Current performance may be lower or higher than the performance data quoted. For up-to-date fund performance, including performance current to the most recent month end, please visit our website at GuggenheimInvestments.com. RBP® is the revenue growth necessary to support the current stock price. RBP® is used as a benchmark against which to measure management’s ability to perform in the future. It is calculated using a reverse discounted cash flow valuation model that uses the current stock price as the primary input. Required Business Performance® Probability – Measures the likelihood that management will deliver the RBP® to support the stock price. There is no assurance the RBP methodology will successfully identify companies that will achieve their RBP or outperform the performance of other indices. This material is not intended as a recommendation or as investment advice of any kind, including in connection with rollovers, transfers, and distributions. Such material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an ofler to buy or sell securities. All content has been provided for informational or educational purposes only and is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation. Risk Considerations: This fund may not be suitable for all investors. Investing involves risk, including the possible loss of principal. The fund seeks to track a quantitative strategy index, meaning that the fund invests in securities comprising an index created by a proprietary model. The success of the fund’s principal investment strategies depends on the etfectiveness of the model in screening securities for inclusion in the Index. The factors used in the quantitative analysis and the weight placed on these factors may not be predictive of a security’s value. As a result, the fund may have a lower return than if the fund were managed using a fundamental investment strategy or an index based strategy that did not incorporate quantitative analysis. Guggenheim Directional Allocation Index SM, Guggenheim RBP® Large-Cap Market Index SM, Guggenheim RBP® Large-Cap Aggressive Index SM, and Guggenheim RBP® Large-Cap Defensive Index SM(the “Indexes”) are the property of Guggenheim Partners Investment Management, LLC (“GPIM”), an affiliate of Guggenheim Partners, LLC, which has contracted with S&P Dow Jones Indices LLC or its affiliate (“S&PDJI”) to maintain and calculate the Indexes. The Dow Jones U.S. Large-Cap Total Stock Market Index SM and S&P 500 Index are the property of S&PDJI and/ or their third party licensors and have been licensed by S&PDJI for use by GPIM in connection with the indices. S&PDJI shall have no liability for any errors or omissions in calculating the indices. The Guggenheim Directional Allocation Fund is not sponsored, endorsed, sold, or promoted by S&P Dow Jones Indices LLC, its affiliates, or their third party licensors and neither S&P Dow Jones Indices LLC, its affiliates nor its third party licensors make any representation regarding the advisability of investing in the Guggenheim Directional Allocation Fund. Conference Board Consumer Confidence Index measures how optimistic or pessimistic consumers are with respect to the economy in the near future. The ISM Manufacturing Report On Business® is an economic indicator published monthly and includes the Purchasing Managers Index (PMI), which measures new orders, production, employment and supplier deliveries. Conference Board Leading Economic Index is used to predict the direction of the economy’s movements in the months to come. Dow Jones U.S. Large-Cap Total Stock Market Index SM is a subset of the Dow Jones U.S. Total Stock Market Index SM, which measures all U.S. equity securities with readily available prices. It includes the largest 750 by full market capitalization. Basis Point– used to express the percentage change in a financial instrument. 1 basis point equals .01%. Beta – a statistical measure of volatility relative to the overall market. A positive beta indicates movement in the same direction as the market, while a negative beta indicates movement inverse to the market. Beta for the market is generally considered to be 1. A beta above 1 and below -1 indicates more volatility than the market. A beta between 1 to -1 indicates less volatility than the market. The referenced fund is distributed by Guggenheim Funds Distributors, LLC. Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC (“Guggenheim”), which includes Guggenheim Partners Investment Management (“GPIM”), the investment advisor to the referenced fund. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim and GPIM. © 2024 Guggenheim Partners, LLC. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. SKU TV-MC-DAF-0724×1024 #61924 |
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