CIO Insights: September

By Jordan Waldrep, CFA


The past month has been unusual. August is usually a quiet time in the market with lower volumes as summer vacations are wrapped up. This year, not so much! This August was defined by continued health and social challenges. The continued spread of the Corona Virus here in the United States appears to be “page two” news now as total number of new cases has continued to fall, yet with no end in sight. The shooting of Jacob Blake by officers in Kenosha, Wisconsin on August 23 sparked further broad protests, including shutting down sporting events such as the NBA playoffs. During all of this, the ramp up to the presidential election intensified and the U.S. was hit by Hurricane Laura and Hurricane Marco. One would think this would result in shaky market but instead we experienced a persistent rise that probably gave every “bear” heartburn. The S&P 500 rose 7.19% in August1 with very few down days.

The TrueShares AI and Deep Learning Fund (LRNZ) was outperformed by the NASDAQ in the month, but still returned over 8% (NAV return), and the fund is up strongly since its lows in March. The fund continues to focus on names that are opening new markets using AI. As a result, we believe they have the potential to deliver strong earnings in up and down economic environments. We saw that as SalesForce and Anaplan both delivered ~30% up weeks in the market after their earnings reports1. We believe the application of AI to business is the next great wave of innovation occurring in the economy and TruesShares AI and Deep Learning is positioning itself to try to take advantage of that trend.

The TrueShares ESG Active Opportunities Fund (ECOZ) took advantage of the month of August to build on its strong start, delivering 1.81% outperformance (NAV Return) over the S&P 500. The fund’s thematic investments in low carbon companies delivered as Tesla delivered 74% in the month and Enphase Energy delivered 28%1. A few names dragged, such as Clorox, which previously had shown strong upward price momentum. Management continues to emphasize lowemission investment in high-quality companies with good corporate governance. While this was a strong month, we believe the overall trends we are investing in have a long way to go to play out.

Finally, we launched our third Structured Outcome portfolio today, SEPZ. It joins JULZ and AUGZ as new products that allow investors to gain buffered market exposure. SEPZ structure should protect against the first 10% of losses in the S&P 500 Price Index over the next year while capturing 87-89% of the upside uncapped2. We are excited to bring this unique investment to the buffered ETF market.


Holdings are subject to change. For updated holdings, click on the following links for the appropriate fund: for ECOZ, click here; for LRNZ, click here. Information is for the month ending 8/31/20, and includes the views, opinions and analysis of the investment manager as of the date of publication. These views and information are subject to change without notice, and are not meant to be a complete analysis of any market, industry, country, or company.

1. Source: Bloomberg. One cannot invest directly in an index.

2. Estimated upside market participation rate represents the relative exposure of the fund’s call options to participate (gross of fees) in the potential upside movement of the S&P 500 Price Index. This will be determined by the relative price of call and put options at the start of the investment period (12-month period). There is no guarantee that the fund will be successful in providing these outcomes or objectives in any period.


ABOUT THE AUTHOR

JORDAN C. WALDREP, CFA
Principal & Chief Investment Officer

Mr. Waldrep has been in the investment management industry for over 16 years. Prior to joining TrueMark Investments, Mr. Waldrep was most recently at USA Mutuals, working as a portfolio manager for multiple funds. Prior to that, Mr. Waldrep was the portfolio manager for a pair of long equity portfolios at Blackfin Capital and a principal at Hourglass Capital providing research for a long-short hedge fund. Mr. Waldrep received his MBA in Finance from the University of Texas, McCombs School of Business in 2004 and his bachelor’s degree in Biology and History from Texas A&M University in 1999. Mr. Waldrep is also a Chartered Financial Analyst.

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