Longboard

COMMENTARY: Managed Futures Strategy Fund June 2019
WAVIX

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Commentary in PDF format.


HIGHLIGHTS

    Contributors
  • Commodities: Long Palladium
  • Currencies: None
  • Fixed Income: Long Italian Bond
  • Equities: Long CAC 40 Index
    Detractors
  • Commodities: Short Silver
  • Currencies: Short Swiss Franc / Japanese Yen
  • Fixed Income: Long Canadian Bankers Acceptance
  • Equities: Short MSCI Mini EAFE

Past Commentaries

June 2019

May 2019

April 2019

March 2019

February 2019

January 2019

December 2018

November 2018

October 2018

September 2018

August 2018

July 2018

June 2018

May 2018

April 2018

March 2018

February 2018

January 2018


RECAP

The Longboard Managed Futures Strategy was up +0.11% on the month as gains in stock indexes and fixed income offset losses in currencies and commodities.

In June, many investors expected the Federal Reserve to announce a rate cut as President Trump continued to apply pressure on Fed Chairman Jerome Powell amongst a host of geopolitical conflicts. While the Fed did not announce the cut that President Trump had been hoping for, a dovish Fed led to speculation that the central bank may cut rates by 50 basis points for the remainder of 2019. The ongoing dovish stance of the Fed combined with weaker than expected economic data led to gains in the equity markets and meant that the US dollar finished the month as the worst G10 performer.

Eurozone issues continued as the ECB kept rates on hold as well and Theresa May stepped down as UK Prime Minister early on in the month. Less-than-impressive European data followed, and concerns of a hard Brexit persisted as the UK leadership race heated up with Boris Johnson, the former Mayor of London, emerging as a front runner against Jeremy Hunt. Both candidates said they want to leave the EU on October 31, 2019.

Elsewhere, the dispute between US and Iran heightened with Iran shooting down a US military surveillance drone, leading to a reduction in risk appetite and increasing concerns of a military conflict between the nations. This led to a recovery in oil prices after a significant drop in May and gold rallied to a six-year high supported by a weaker USD, dovish Fed comments and a flight to safety for investors.

At the same time, the US and China appeared to approach a truce as Presidents Trump and Xi met at the G20 summit. President Trump then announced a deal is “90% done” which was a positive for the stock market.

Performance (as of 6/30/2019)
*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 2.88% 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.longboardfunds.com. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.

OUTLOOK

Geopolitical uncertainty had a mixed effect on the portfolio. While our fixed income exposure continued to profit from weaker global economic conditions, our foreign exchange positions suffered as investors sold the US dollar and Japanese yen, two currencies we are long. If this uncertainty continues, we should expect the same performance from these sectors. Our equity exposure comes predominantly from the US and Europe, and lower interest rates should benefit our long exposure. However, if lower rates do not prevent a global recession, equities could suffer similar to currencies. In commodities, we still maintain a short bias in grains and soft but initiated long gold positions in both the US and Japan as investors looked for a “safe haven” asset. Gold prices should continue to rise if investor doubt regarding the health of the global economy remains. Some of this ambiguity will be addressed when the Federal Reserve meets at the end of July.


EQUITIES

Global stock markets rallied on the expectation of lower global interest rates. Long positions in the French, Dutch, European and Australian markets contributed to the gains.


FIXED INCOME

Global bond prices also surged higher during the month due to the probability of central bank easing. The largest gains came from long positions in US, German, Japanese and Italian bonds.


CURRENCIES

Long US Dollar and Japanese Yen positions hurt the portfolio as the Fed assumed a dovish stance.


COMMODITIES

Commodities finished the month relatively unchanged. Gains in energies, softs and precious metals were offset by losses in industrials and grains.


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 https://www.longboardfunds.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.

3521-NLD-7/16/2019