Longboard

COMMENTARY: Managed Futures Strategy Fund November 2017
WAVIX

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Commentary in PDF format.


HIGHLIGHTS

    Contributors
  • Equities: Long U.S. equities
  • Commodities: Long Brent crude oil and cocoa
  • Currencies: Long the euro and Mexican peso against the U.S. dollar
  • Fixed income: Short 2-year U.S. government bonds
    Detractors
  • Equities: Long European equities
  • Commodities: Long nickel and lean hogs
  • Currencies: Long the Australian dollar against the U.S. dollar and Japanese yen
  • Fixed income: Short 3-year Australian government bonds

Past Commentaries

November 2017

October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

RECAP

The fund returned -0.62% in November with mixed performance across the four asset classes.

Global stocks soared higher this month as major market averages set new record highs, including the Nasdaq, Dow Jones and S&P 500. With this month’s gains, U.S. stocks (measured by the S&P 500) have rallied over 20% since last year’s presidential election. The growing likelihood of U.S. tax reform provided an accelerant to the U.S. equities uptrend. Yet, despite new record highs in stocks, signs of caution showed up in both sovereign and high-yield bond markets. The Federal Reserve is widely expected to raise rates in December, while unwinding its balance sheet at an increasing pace.

Other asset classes were mixed in November. The big story in commodities was the recent rebound in crude oil and associated products as we saw the first broad uptrends emerge across the energy complex in years. Industrial metals and agricultural markets have also shown persistent trends in recent months. These new price trends have caused us to boost commodities exposure above equities this month. Meanwhile, lackluster price movements in currencies and fixed income kept exposure low in those sectors.

Performance (as of 11/30/2017)
*INCEPTION DATE: 6/27/12 **INCEPTION DATE: 3/22/13
The Total Annual Fund Operating Expenses for the Longboard Managed Futures Strategy Fund class A and I are 3.12% and 2.87% respectively. The maximum sales charge for Class A (Max Load) shares is 5.75%. The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Investment return and principal value will fluctuate, so that shares, when redeemed, may be worth more or less than their original cost. Past performance is no guarantee of future results. For performance information current to the most recent month-end, please call toll-free 855-294-7540 or visit our website, www.longboardmutualfunds.com. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.

OUTLOOK

Despite record highs in U.S. stock markets, minor cracks appeared under the surface. High-yield bonds plunged mid-month, failing to confirm new highs in equities. The U.S. yield curve continued to flatten, typically a signal of slowing economic growth while some overseas equity markets incurred bouts of turbulence. We saw notable declines in emerging markets and in the stock markets of European periphery countries. Chinese equities suffered their worst monthly performance of 2017, which coincided with a decline in the country’s bond market.

Despite signs of instability, the broader trends across the equity asset class remain largely positive. As disciplined trend followers, this means we maintain a healthy allocation to the broad uptrends still in place across the globe. Meanwhile, our growing commodities allocation provides diversification away from traditional asset classes and the opportunity to capture uncorrelated risk premiums.


GLOSSARY
Commodity Market
A physical or virtual marketplace for buying, selling, and trading raw or primary product such as natural resources, agricultural products, and livestock.
Forward Contract
A non-standardized contract between two parties to buy or sell a specified asset of specified quantity with delivery and payment occurring on a specified date.
Futures Contract
A standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality with delivery and payment occurring on a specified date.
Long
Buying an asset such as a stock, commodity or currency with the expectation that the asset will rise in value.
Risk Allocation
The estimated maximum equity a position could lose, divided by the estimated aggregate equity currently at risk of loss across all positions inthe portfolio.
Short
Selling an asset such as a stock, commodity or currency, with the expectation that the asset will decrease in value.
Long-Term
Holding periods averaging greater than one year.

PROSPECTUS OFFERING DISCLOSURE

Investors should carefully consider the investment objectives, risks, charges and expenses of the Longboard Managed Futures Strategy Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained at http://www.longboardmutualfunds.com or by calling 855-294-7540. The prospectus should be read carefully before investing. The Longboard Managed Futures Strategy Fund is distributed by Northern Lights Distributors, LLC, a FINRA/SIPC member. Longboard Asset Management, LP, is not affiliated with Northern Lights Distributors, LLC.

MUTUAL FUND RISK DISCLOSURE

Mutual funds involve risk including possible loss of principal. The fund will invest a percentage of its assets in derivatives, such as commodities, 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 commodities. 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 credit risks and investments in fixed income securities, structured notes, asset-backed securities and foreign investments. Furthermore, the use of short positions and 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 regulation or taxation rules could increase costs associated with an investment in the Fund.

8412-NLD-12/13/2017