The Dynamic Alpha Macro Fund aims to outperform its primary benchmark, the S&P 500, by employing a dual-strategy approach. The fund combines a fundamental global macro strategy with a balanced portfolio of U.S. equities. This blend of non-correlated assets is designed to manage risk and generate what we refer to as “Dynamic Alpha.”

Primary investments include U.S. Equity ETFs, a global macro futures strategy, and short-term fixed income. The global macro strategy provides long/short exposure to over 40 diverse and non-correlated markets, including currencies, metals, energy, commodities, and financial indices.

PERFORMANCE METRICS

* Fund inception was 7/31/2023. Performance is as of 9/29/2023.
Performance data shown represents past performance and is not a guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Updated performance information and daily net asset value per share (“NAV”) is available at no cost by calling toll-free 1-833-462-6433.

PORTFOLIO OVERVIEW

Contributors

Long Sugar, Short Nasdaq

Detractors

Equities (ETFs), Long Gold, Long Silver, Long 5-Year Treasury Note

Current Positions

Long Strategic Equities, Long Gold, Long Silver, Long Sugar, Short Nasdaq

MACRO OBSERVATIONS

Top Macro Thoughts for the Month:

1. Traditionally, downturns in cyclical sectors such as housing and manufacturing are early indicators of an impending recession. But this is an upside/down cycle. Recent upticks in PMI (Purchasing Managers Index) and manufacturing could be a false warning signal, masking the real weakness in services. What if services are leading us into recession? We had pull-forward goods demand in 2021, followed by pull-forward services demand in 2022 after the economy fully opened. (For a more detailed discussion on pull-forward demand, see below) And now, with inflation moderating but price levels well above those from 2019, we could have a consumer who cuts back on services for the first time ever heading into a recession. In addition, auto and credit card delinquencies are ticking up and the labor market is loosening.
2. After discussing the observed trends in the services and goods sectors, it’s crucial to gauge the market’s reaction to these dynamics. Market sentiment, often reflecting broader economic expectations, continues to favor a soft economic landing. However, we believe a “hard landing” is coming. Growth in M2 money supply is negative. Banks have tightened credit standards dramatically as they look to repair balance sheets. Federal tax receipts are negative – this has historically only ever happened in the lead-up to a recession.
3. Admittedly, our early recession prediction requires some introspection. Being early is challenging in our field. While we acknowledge missing the full impact of the excess stimulus injected into the system over the past 18 months, we do not believe the right thing to do is to flip all our trades around to follow the soft-landing narrative. We are currently sticking to our “hard landing” scenario as our base case for Q4 2023 and 2024.

As always, we continue to be nimble, and if the economy manages a “soft landing,” we’ll pivot our positioning and find other trades. This is also why we maintain a strategic allocation to US Equities in our overall fund strategy, balancing a buy-and-hold approach with active global macro long/short positions.

Notes on Pull Forward Demand:

In economics, “pull forward demand” refers to a situation where consumers and/or businesses accelerate their purchases of goods or services, typically in anticipation of future price increases, changes in economic conditions, or other factors that may affect their ability to obtain the goods or services in the future.

When pull-forward demand occurs, it can have several economic implications:

Temporary Spike in Demand: Pull-forward demand can lead to a temporary surge in demand for certain products or services. This can cause a short-term increase in sales and production for businesses.

Inventory Fluctuations: Businesses may experience fluctuations in their inventories. They may need to replenish their stocks more quickly to meet the heightened demand, which can impact supply chain management.

Price Volatility: If demand surges due to pull-forward demand, it can lead to price increases in the short term. However, if the underlying factors causing the pull-forward demand are temporary, prices may subsequently stabilize or even decline.

Future Demand Reduction: After the pull-forward demand period ends, demand may dip as consumers or businesses have already purchased what they needed in advance. This can result in lower demand in the future.

Economic Forecasting Challenges: Pull-forward demand can complicate economic forecasting, as it can distort economic indicators and make it challenging to assess the underlying health of an economy. Analysts need to distinguish between temporary demand spikes and sustainable economic growth.

For example, during the COVID-19 pandemic, there was a surge in demand for certain products like toilet paper, cleaning supplies, and non-perishable food items as consumers stockpiled these goods in anticipation of potential shortages or lockdowns. This behavior represented a form of pull-forward demand.

Overall, pull-forward demand is an important concept in economics because it can affect production, pricing, and economic trends, and it requires careful consideration when analyzing economic data and making forecasts.

OUR GLOBAL MACRO LONG/SHORT INVESTMENT UNIVERSE

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CONTACT INFORMATION

If you’re an advisor or investor interested in learning more about the Dynamic Alpha Macro Fund, you can get in touch through the “Contact Us” page on their website at https://dynamicalphafunds.com/contact-us/. Alternatively, you can directly email your inquiries to info@dynamicalphafunds.com.

IMPORTANT RISK INFORMATION

Disclaimers:

• An investor should consider the investment objectives, risks, charges, and expenses of the Dynamic Alpha Macro Fund carefully before investing. The Fund and summary prospectus contain this and other information about the Fund and should be read carefully before investing. To obtain a prospectus, please call 1-833-462-6433 or access online @ https://regdocs.blugiant.com/dynamic-alpha-macro/
• The views, opinions, or advice contained above are solely those of the author and do not necessarily reflect those of Ceros Financial Services LLC or its affiliates. The strategies and/or investments referenced may not be appropriate for all investors, as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
• Ceros Financial Services, Inc., member FINRA/SIPC, serves as distributor to the funds and is a commonly held affiliate of Advisors Preferred. Advisors Preferred and Ceros are not affiliated with the funds’ subadvisor. Dynamic Wealth Group serves as the subadvisor to the Dynamic Alpha Macro Fund.
• There is no guarantee any investment strategy will generate a profit or prevent a loss. There is no guarantee the funds will achieve their investment objectives.
• Investors cannot invest directly in an index.

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