Dynamic Alpha Macro Fund (DYMIX): March 2025 Overview

Welcome to the Monthly Summary

The Dynamic Alpha Macro Fund aims to outperform its benchmark 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.”

The portfolio is comprised of 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.

We are committed to our shareholders, keeping you informed and ensuring our strategies align with the ever-evolving financial landscape. If you have any questions, feel free to contact us at info@DynamicWG.com.

peRFORMANCE METRICS

* Gross Expense Ratio is 2.00%.  Net Expense Ratio is 1.98%.
* Fund inception was 7/31/2023.
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.

Dynamic Alpha Macro Fund PORTFOLIO OVERVIEW

Contributors:

• Long:  2-Year, British Pound, Gold, Silver, Copper
• Short: Coffee

Detractors:

• Long: Strategic Equities, Corn, Japanese Yen
• Short: None

Current Positions (as of 3/31/2025):

• Long: Strategic Equities, 2-Year Treasury, British Pound, Corn, Gold, Japanese Yen, Silver, Copper
• Short: E-Mini S&P, Coffee

Macro Observations and Market Analysis

Risk

• Most modern hedge fund strategies (including macro strategies) begin by equating risk with portfolio volatility. They market themselves to allocators by describing the “vol” target they are shooting for. Value-at-risk (VaR) modeling is heavily employed when managing these portfolios.

• In contrast, we start with drawdowns, targeting 20% peak-to-trough drawdowns and reducing portfolio exposures – often dramatically – during drawdown periods, through a combination of hitting risk limits on individual positions as well as portfolio level P&L triggers. While we review a daily VaR report, this is a secondary, or even tertiary data point in our risk management framework. In line with classic macro risk management principles, we simply reduce position sizing during drawdowns on a position-by-position basis.

• We acknowledge that a concentrated, classic macro approach such as ours, with a high nominal return target, is both lumpy and higher vol. Indeed, we have no issue with the fact that the vol of the global macro strategy within the Dynamic Alpha Macro Fund (DYMIX) is 20-25% annualized. This is also why we combine passive equity exposure with the global macro strategy within the fund, with the goal of reducing overall volatility.

How to categorize us

• Many large macro strategies have catered to the evolving landscape of the past 30 years, often championed by consultants and asset allocation models. They have slotted themselves into the “diversifying strategies” box, offering 7% vol strategies that target a mid-single digit long-term compound return. They are properly bucketed as low-vol diversifiers and/or replacements for part of a fixed income portfolio.

• The goal of the global macro strategy within DYMIX is to be categorized as a return generator – and one with a very low long term correlation to equities, bonds, or other macro strategies due to our unique, concentrated portfolio construction. Again, highlighting why DYMIX targets 50% stocks and 50% global macro allocation. Many investors and advisors allocate to DYMIX from stocks, other alternatives, or a mix of stocks, bonds & alternatives. 

Our current global macro portfolio

In our global macro portfolio, we are short equities, long Treasury notes, and long commodities. 

Based on the last 75 years of economic data, this is a logically incoherent portfolio. It violates relationships that have held since WW2.

• For example, short stocks and long commodities should not work simultaneously: in a recession where stocks fall, commodities like oil and copper should suffer as well. Indeed, that’s what we’ve seen in e.g. 1990-1991 or 2008-2009.

• Short stocks and long Treasury notes is consistent with a disinflationary recession: those should work in a weakening U.S. growth environment.

• Treasuries and commodities don’t really have a consistent relationship so there’s not much to glean here: 2001-2008 was a secular bull market in commodities and a bull market in bonds; the 1970s were a bull market in commodities and a bear market in bonds.

We don’t need all three of these pieces to work out; we do just fine when only half of our ideas pan out. In fact, that’s the norm in macro trading. But what we like about our portfolio is that there is a chance that – for the first time – all three might just be winners simultaneously. The key reason: China has replaced America as the engine of global manufacturing growth.

Source: BCA Research
Note: Calculated as the average annual consumption growth over the past 10 years.

In our February 2025 letter, we shared a chart that showed that copper growth has always taken a hit during U.S. recessions (although our chart only went back to the late 1980s, the relationship holds back to WW2).

We theorized that perhaps, for the first time ever, that relationship was on the verge of breaking down. In the chart above, note that nearly all the world’s growth in copper demand emanates from China today (green bars).

As Europe and China reaccelerate and America slows, short US stocks, long US bonds, and long globally important commodities could all do just fine this year.

Most of the investment research that we read is bearish on copper and silver, since these metals tend to weaken during periods of weak US growth. BCA Research, whom we subscribe to and the firm that produced the chart above, is also tactically bearish on copper due to their belief that much of the run-up in the copper price is due to front-running of Trump’s tariffs. There is some truth to that, as the price of Shanghai copper is weaker than COMEX copper in NY.

However, we believe that China’s growth is turning the corner for the first time in five years, and the price action in both copper and silver is bullish. In addition, a meaningful amount of China’s copper consumption in the last few years has been supplied by US scrap copper, a source that has dried up due to fears of export restrictions and tariffs. A greater demand for virgin copper in China should act as an added catalyst.

Part of our job as portfolio managers is to know when to push back and openly disagree with the research viewpoints we read, no matter how well articulated. For now, we give the benefit of the doubt to the thesis that there is a genuine demand induced bull market in copper and silver.

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As always, we continue to be nimble. If the data and/or our views change, we can pivot our positioning and find other trades within the 40+ markets we have available. This is also why we maintain a strategic allocation to U.S. equities in our overall fund strategy, balancing a buy-and-hold approach with active global macro long/short positions.  We appreciate your continued trust and partnership and look forward to updating you on our progress in the coming months.

OUR dynamic alpha macro fund LONG/SHORT INVESTMENT UNIVERSE

The list above is not all inclusive.

CONTACT INFORMATION for the Dynamic Alpha Macro Fund

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 at https://regdocs.blugiant.com/dynamic-alpha-macro/
• Expense ratios shown reflect gross/net fund operating expenses including acquired fund fees and expenses as per the Fund’s prospectus dated November 1, 2024. The net expense ratio reflects a contractual fee waiver/reimbursement that is in place until 10/31/2025. Absent such waiver, performance and returns would have been lower. The Adviser may discontinue the waiver after the expiration date. Investors should review the Fund’s prospectus for a complete discussion of fees and expenses.
• All investment strategies and investments involve the risk of loss. Nothing within this communication constitutes financial, legal, tax, or other advice, nor should any investment or strategy be undertaken without fully understanding all the risks associated with such an investment or strategy.
• 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, distributes 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, which serves as the subadvisor to the Dynamic Alpha Macro Fund.
• Any performance figures reported are historical and should not be taken as an indication of future performance. Investment in the financial markets involves risk, and there is always the potential of losing money when investing in securities.
• The views expressed about market trends, including opinions on bonds, equities, gold, crude oil, or any other market, are based on current market conditions and are subject to change without notice. These views should not be construed as a recommendation for any specific investment or financial strategy.
• Discussions of supply and demand, including historical context and future forecasts, involve estimates and assumptions subject to significant uncertainties. Actual future conditions (including oil supply, demand, and prices) may vary markedly from the analysis presented.
• The commentary regarding our trading approach and investment views, including short-term trading outcomes and long-term market predictions, represents the opinions of our investment team at the time of writing. Our commentary does not promise or guarantee future investment strategies or performance.
• Our economic outlook, including any predictions of economic conditions or their impact on investments, is speculative and should not be relied upon for making investment decisions. Economic conditions are complex and can be affected by various unforeseen factors.
• Comments made on third-party sites are the views of the individuals and do not represent the opinions or recommendations of Ceros. Ceros does not monitor or endorse these comments.
• Dynamic Wealth Group (“Dynamic”) is an SEC-registered investment adviser. SEC registration does not constitute an endorsement of Dynamic by the SEC, nor does it indicate that Dynamic has attained a particular level of skill or ability. This material prepared by Dynamic is for informational purposes only. It is not intended to substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product.
• Opinions expressed by Dynamic are based on economic or market conditions when this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated.
• Facts presented have been obtained from sources believed to be reliable. Dynamic, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.
• Any reference to an index is included for illustrative purposes only, as an index is not a security in which an investment can be made. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. Past performance is no guarantee of future results. Actual returns may be lower.
• S&P 500 Total Return Index: The Standard and Poor’s 500 is a capitalization-weighted index of 500 stocks representing all domestic industry groups. S&P500TR assumes reinvestment of any dividends.
• S&P Target Risk Growth Index: The S&P Target Risk Growth Index is designed to measure the performance of equity allocations, while seeking to provide limited fixed income exposure to diversify risk.
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• Fund Ranking Disclosure: As of 12/31/24, the fund was ranked #1 in the Morningstar Macro Trading category out of 60 funds for the 1-year period based on total returns. Rankings are based on historical performance and are subject to change.