COMMENTARY: Managed Futures Strategy Fund February 2019

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Commentary in PDF format.


  • Commodities: Short Kansas City Wheat
  • Currencies: Short Euro / British Pound
  • Fixed Income: Long Australian 3-Year Bond
  • Equities: Short MSCI Emerging Markets
  • Commodities: Short RBOB Gasoline
  • Currencies: Short British Pound / Japanese Yen
  • Fixed Income: Long Gilt
  • Equities: Short FTSE 100

Past Commentaries

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


The fund was down -2.07% in February as short positions in equities accounted for most of the losses.

February was a milder version of January as markets rallied despite a lack of resolution around the major risks in the global economy. Although President Trump held off raising tariffs on the original March 1 deadline, U.S. – China trade talks still continue without a deal. Meanwhile, we are racing toward the March 29 Brexit deadline with little clarity around its resolution. Central bank support remains a catalyst as equity markets continue to rally despite these risks. This sustained rally caused the fund to cut its short equity positions in half during February, including closing shorts in all U.S. equity indexes as they continued to move higher.

Much like equities, the energy complex continued to climb but at a slower pace with major oil benchmarks gaining roughly 5% in February. The fund remained short the energy complex amid the ongoing rally. Meanwhile the U.S. dollar proceeded to chop sideways but ended February up slightly returning to levels seen at the end of 2018. The fund remained long the U.S. dollar versus most major currencies.

Performance (as of 12/31/2018)
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.


Given the drastic reversals in equities from 2018 until now, the fund’s equity exposure currently sits near all-time lows. This means in the near term the performance will be heavily driven by other areas, specifically commodities which represent nearly half the portfolio currently. While January hurt more from a performance aspect, February was the month that really reshaped the portfolio. Looking at the portfolio as a whole, the fund went from 80 positions to 63 positions by the end of the month, highlighting the lack of strong trends across the globe.

Moving forward, our clearest position to capitalize on is a strong U.S. dollar, along with weakening equities abroad. Commodities are more of a mixed bag but given the large current allocation to them, they remain important. The shakeout process can be difficult but allows the fund to be flexible and move quickly to enter new trends.


We closed positions in 12 global equity markets, with 6 of these being US indexes. (NASDAQ, S&P 60, VIX, S&P 500, Russell 2000, S&P Mid-Cap 400). There were no initiations in this asset class during the month and we remain net short internationally.


Long positions in German, Australian, and Canadian bonds caused losses in Fixed Income.


Small gains in long U.S. dollar positions helped produce positive returns in this asset class, offsetting losses from long yen positions.


Commodities gains were driven by short positions in grains while our short position in the energy complex was a mild detractor.

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.
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.
Selling an asset such as a stock, commodity or currency, with the expectation that the asset will decrease in value.
Holding periods averaging greater than one year.


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 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.