ADPV and Market Shifts: Navigating August Volatility

ADPV ETF Recap: August 2024

After a sharp selloff in broad equities markets around the world to begin the month of August, the Adaptiv Select ETF was able to rebound and put in another month of outperformance for the year.1

 

That now brings the YTD (through 8/31/24) return to 28.80%. ADPV’s benchmark – the S&P 500 – has a YTD return of 19.3%:

 

Holdings Recap

The Adaptiv Select ETF was fortunate to own a handful of names that were able to exhibit continued strong momentum in a sideways market, including Nu Holdings (NU) Rocket Companies (RKT), Virtu (VIRT), Key Corp (KEY), Palantir Technologies (PLTR), and AT&T (T):

 

 

 

The worst performers for the month of August were Kyndryl Holdings (KD), Blue Owl Capital (OWL), Gates Industrial Corp (GTES), Spirit AeroSytems (SPR), and SLM.

 

Overall Sector Exposure

FInancials, which have been the largest weighting in ADPV for a couple of months now, saw another slight nudge, bringing the sector to 49% of the strategy overall. The more intriguing move this month was the addition of Healthcare, which went from 0% exposure up to 9%. Industrials fell from 8% to 2%, after being a much larger weighting earlier in the year. Utilities also dropped from 6% to a 0% weighting during the month2:

*Concentration guidelines for ADPV are based on GICS Sub-Industry/Tier 4

 

 

Compared to its benchmark, ADPV is overweight Financials and Real Estate:

August saw an average month for trading and reconstitution. After 7 new names in July, we saw just 4 in August, with OWL both being sold and bought back two weeks later:

 

Market Commentary from a Technical Perspective

After a low volatility in June (and throughout the summer) we saw a big spike in volatility to start August, following a news event in Japan. Markets quickly rebounded and were actually positive for the month, attempting to climb back near the previous all-time highs from mid-July.

 

Given that we are coming into September, with “no incumbent” seasonality on the doorstep, it would make sense to see markets sell-off and/or consolidate here in the coming weeks and months, as we head into November. It might not be fun, but historically speaking it would be quite normal. On top of that, the S&P 500 is still having a very strong year and we clearly remain in a strong uptrend for broad markets.

 

 

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1 The performance quoted represents past performance and does not guarantee future results. The investment return and principal will fluctuate. Investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. For the most recent month-end performance and standardized performance, please visit www.adpvetf.com.
2 Holdings are subject to risk and change. You can find a full list of up-to-date holdings HERE.

 

Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund’s prospectus and Summary Prospectus, which may be obtained by visiting https://adpvetf.com/investor-materials. Read the prospectus and Summary Prospectus carefully before investing.

 

Investing involves risk, including possible loss of principal.

To the extent the Fund’s investments are concentrated in or have significant exposure to a particular issuer, industry or group of industries, or asset class, the Fund may be more vulnerable to adverse events affecting such issuer, industry or group of industries, or asset class than if the Fund’s investments were more broadly diversified. Active management by the Adviser in selecting and maintaining a portfolio of securities that will achieve the Fund’s investment objective could cause the Fund to underperform compared to other funds having similar investment objectives. For longer periods of time, the Fund may hold a substantial cash position. If the market advances during periods when the fund is holding a large cash position, the Fund may not participate to the extent it would have if the Fund had been more fully invested The Adviser relies heavily on a quantitative model developed by the Adviser, which is used to value and rank investments or potential investments, to provide risk management insights and to assist in reducing extending declines in in the Fund’s net asset value. When models and data prove to be incorrect, misleading, or incomplete, any decisions made in reliance thereon will expose the Fund to risks.

 

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