Quarterly commentary

As of 6/30/2017

Markets changed personality in the second quarter, as many investment classes traditionally deemed “Risk-Off”, moved in greater correlation to those traditionally called “Risk-On”.  In Q1, higher rated bonds such as government treasuries and investment grade corporates were sluggish while high yield bonds and the stock market were generally higher.  In Q2, however, high yield bonds and equities once again gained ground but the higher grade fixed income also rose.  Higher correlations are not unheard of but are more of the exception than the norm.  With more classes on positives paths, SFHYX/HFSAX took advantage of a wider selection while at the same time, was able to discriminate among the areas that had less leadership characteristics.  The most significant changes occurred in June, as a loss in positive momentum was detected in some classes, primarily high yield.  Reduction in positions and the implementation of hedging techniques were applied in order to mitigate risk.