April Monthly Snapshot

361 Global Long/Short Equity Fund

Global markets pushed ahead in April despite ongoing concerns about trade wars, rising oil prices and higher interest rates (at least in the U.S.). European markets did most of the heavy lifting, with strong gains in Germany, France and the U.K. In contrast, U.S. stocks moved only modestly higher, even as companies reported robust earnings growth.

For the month, the Fund returned 0.60%, which was well ahead of the Morningstar Long/Short Equity category average (-0.28%), but fell short of the MSCI World Index’s 1.15% return. The Fund’s net exposure (approximately 70%) hindered performance—costing about 32 bps on a relative basis—and the beta profile had no material impact. Positive attribution from being short higher-beta names was offset by the relative underperformance of the lower-beta positions. The alpha models performed well, adding about 90 basis points, due in large part to the strong performance of, and overweight position in, the highest-predicted alpha stocks. At the country level, underweight positions in France and the U.K. were costly, as those markets performed well, while the underweight to the U.S. was beneficial. Lastly, considering sector positioning, the most impactful exposure was the underweight to energy. With oil surging, energy stocks raced ahead, and the Fund’s underweight exposure cost about 45 bps.

361 Domestic Long/Short Equity Fund

Throughout the month of April, U.S. companies reported strong earnings for the first quarter, however that wasn’t sufficient to propel stocks much higher. Investors seemed to be accepting of the fact that higher earnings had been priced-in months ago. The rapidly rising dollar didn’t help either, at least for large caps, although it did seem to be a tailwind for micro and small cap stocks that derive far less of their revenue from overseas.

For the month, the Fund produced a return of -0.71%, underperforming both the Morningstar Long/Short Equity category average of -0.28% and the Russell 1000 Index, which was up 0.34%. The Fund’s net exposure (approximately 70%) and beta profiles were both modestly negative from an attribution perspective—costing about 14 bps in total. Further, while the alpha models performed well (i.e., the overweight to the highest predicted alpha stocks added about 30 bps to relative performance), sector positioning hurt. The net short exposure to energy stocks cost almost 1% in relative terms, and the overweight to consumer staples also detracted from performance.