I have reported a few times in this space about the difficulty tactical managers have had in the recent market environment. This update today continues to show a trend of underperformance.
In February, the Cambria Global Momentum ETF (ticker: GMOM), a notable player in the tactical space, called a risk-off environment. As of June 4, 2019 the ETF is comprised of almost 100% bonds (of different varieties and flavors) and no equities except for some REIT exposure. Year-to-date through June 4, 2019, the ETF has produced a total return of 2.71%, compared to the S&P 500 of 12.74% and the Bloomberg Barclays U.S. Bond index of 4.91%. Most interestingly, yesterday June 4 when the S&P 500 was up 2.2%, this fund was up only 0.4%. Unremarkable performance by any measure.
This market environment has been characterized by geo-political turmoil, trade battles, Fed-speak, and economic stats that present a mixed bag of conclusions. More can be said on this topic, but let it be known that trying to outguess this market is ripe with risk. For long-term investors who have correctly evaluated their tolerance for risk, it is best to stay the course.