Markets in Focus

Timely analysis of the bear market and volatility driven by the coronavirus

November 23, 2020: Benefits cliff looms over stimulus squabbles

The performance of equity markets continues to be resilient despite a surge in COVID-19 cases globally, increased lockdown measures, continued election drama, and a lack of agreement on appropriate fiscal stimulus measures, said Matt Orton, CFA, Director and Portfolio Specialist at Carillon Tower Advisers. However, from a technical perspective, markets certainly look overbought, and investor sentiment looks extended.

“We’ve seen a lot of investor surveys recently highlighting that expectations for the economy are almost entirely positive, and to me that’s always dangerous,” Orton said. “When things are uniformly in one direction, it usually means you need to take a break in some way shape or form. Too many people have jumped on the bandwagon.”

Markets may need a break
% of Russell 3000 issues > 50 and 200 day moving averages (DMA)

Percentage of Russell 3000 issues greater than 50 and 200 day moving averages (DMA) 

Percent of Issues Above 200 DMA

Percent of Issues Above 200 DMA 

Percent of Issues Above 50 DMA

Percent of Issues Above 50 DMA 

Source: Bloomberg, as of 11/20/20

Small-cap stocks and international equities are emerging as potential opportunities in this environment, due to the extreme valuation differential. The big question is whether the outperformance is sustainable. “Last quarter’s earnings for small caps were very strong with improving analyst expectations,” Orton said. “And it’s important to note that expectations are improving in both growth and value. There is still a lot of room to go.”

In the near term, Orton remains bullish going into 2021. Consolidation and some volatility is to be expected. “The biggest thing to work through may be over-optimistic investor sentiment,” Orton said. “Many stocks in the Russell 3000® Index are trading well over their 50- and 200-day moving averages.” Orton’s overall sentiment is positive, though, and any market pullbacks can be used as an opportunity to accumulate.

The major risks, as Orton sees them, are rising COVID cases coupled with a lack of fiscal stimulus as multiple benefit programs are set to expire on December 31. “The base assumption of the markets is that there will be some sort of fiscal stimulus passed once we move into January,” Orton said. “The risk is that we are already seeing growth momentum losing steam and failure to pass legislation in January – or a package that is too weak – risks reversing the positive economic trends we’ve seen in the back half of this year.”

The programs set to expire at the end of the year include federal expansion of unemployment benefits, student loan deferments, an eviction moratorium, and expanded paid family leave. “This is much more of a steep cliff than we had at the end of July,” Orton said. “There is a portion of the population making less than 50% of their usual wages with benefits set to expire soon. That situation is somewhat underappreciated by the market and could lead to increased volatility there is no stimulus.” This is perhaps why volatility expectations for early 2021 haven’t moved much despite recent the positive vaccine news.

VIX futures: Only the front end of the curve has meaningfully changed despite vaccine optimism

VIX futures: Only the front end of the curve has meaningfully changed despite vaccine optimism 

Source: Bloomberg, as of 11/20/20.

Orton emphasized that despite these risks, he remains optimistic on the market though some short-term consolidation certain makes sense. Any volatility can be used as an opportunity, especially down the market cap spectrum. “There is a lot of growth potential if the economy continues to rebound,” Orton said.


Risk Information:
Investing involves risk, including risk of loss.
Diversification does not ensure a profit or guarantee against loss.

Disclosures:
Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, and other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Carillon Tower Advisers or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professional advisers. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

The Chicago Board Options Exchange (CBOE) Volatility Index, or VIX, is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors’ sentiments.

The moving average (MA) is a technical analysis tool that smooths out stock price data by creating a constantly updated average price.

The Russell 3000® Index measures the performance of the 3,000 largest U.S.-traded stocks, which represent about 98 percent of the total market capitalization of all U.S. incorporated equity securities.

Frank Russell Company (Russell) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor, or endorse the content of this communication.

 


 

CTA20-0762 Exp. 3/23/2021



November 16, 2020: The good news/bad news market: Vaccines vs. lockdowns

For the second week in a row, markets headed into trading fueled by the news that a coronavirus vaccine developer is reporting a testing success rate of 90% or better. Yet at the same time, talk of renewed lockdowns threatens to eclipse surprisingly strong earnings news. Bullish sentiment among individual investors has surged, but will it last?

“There’s almost this dichotomy going on in the market right of now of positive news around the vaccine and optimism around continually strong economic data being fought by what’s going to happen with rising cases,” said Matt Orton, CFA, Director and Portfolio Specialist at Carillon Tower Advisers.

Last week, vaccine optimism was the clear winner with the S&P 500 closing at a record high despite rising U.S. infections. The Nasdaq 100® lagged the Russell 2000® while European equities extended rallies despite severe restrictions to slow the spread of the virus. Even a deluge of gloomy near-term outlooks from policy makers couldn’t douse the optimism, and that seems poised to continue this week after a pledge from two of President-elect Joe Biden’s coronavirus advisors to avoid a national lockdown. Small caps, value, and cyclicals all look set to continue moving higher, but Orton said he always encourages some healthy skepticism following such a strong rally, especially of the most beaten-down companies.

Small caps won big last week

Small caps won big last week 

Source: Bloomberg, as of 11/13/2020

As this spring demonstrated, lockdowns do not have to be national in scope to adversely impact the economy. At the state level, both Michigan and Washington have announced more stringent restrictions, joining tighter municipal measures imposed in New York and Chicago last week. Given the record number of cases, Orton said it’s reasonable to expect more cities and states to follow suit. Bonds have been more circumspect than equities with Treasuries following German yields lower and curves flattening slightly.

However, long term Orton said he still sees a lot to be enthusiastic about. That is especially true looking at earnings season, which is coming to a close. For the third quarter, 92% of the companies in the S&P 500 have reported actual results and the blended earnings decline stands at -7.1%, a huge beat of the expected -21.2%. Earnings are also posting a record level of beats with 84% of S&P 500 companies reporting a positive earnings-per-share (EPS) surprise and 78% reporting a positive revenue surprise. Even more impressively, company management has spent the past month gently talking expectations upward – and this will be the second quarter in a row where guidance is increasingly positive. But market reaction to the positive news was almost non-existent with markets actually down in October. The big earnings beats, the rise in forecasts, and the negative market reaction to them highlight the two big issues driving sentiment – the market’s twin preoccupations with the U.S. elections and the resurgent pandemic.

Quote Image
If we can sustain these levels of investor optimism, that bodes well going into the end of the year.

Positive investor sentiment surged following vaccine news

Investor optimism has jumped to the highest level in years following positive vaccine news. That’s pushed the gap between those who say they are positive on the market and those with a bearish outlook to extended levels, about two standard deviations from its average reading over the last five years. Last week’s positive vaccine update jumpstarted a rotation into economically sensitive industries and helped propel the S&P 500 Index to a new all-time high.

American Association of Individual Investors sentiment survey

American Association of Individual Investors sentiment survey 

Source: Bloomberg, American Association of Individual Investors, as of 11/12/20.

The American Association of Individual Investors weekly sentiment survey tracks the difference between investors who report feeling bullish about the market in the next six months and those who feel bearish.

“What should stand out is throughout all of last year, you had pretty depressed bullish vs. bearish sentiment,” Orton said. “You had incredibly bearish sentiment throughout this pandemic and most of this recovery as well.”

Only recently, with the arrival of positive vaccine news – aided possibly by the end of the presidential election – has the market seen a surge in individual investor bulls vs. bears, Orton said. “I think that is particularly important because it shows that there has, in fact, been some sort of sentiment shift,” he said. “Whether it’s too premature, whether it’s overdone – it’s too difficult to tell right now, but it’s definitely significant. If we can sustain these levels of investor optimism, I think that bodes incredibly well going into the end of the year.”

Still, he said it’s worth remembering that when investor sentiment spikes sharply, it does tend to move back just as quickly.

Meanwhile, the easing of household debt burdens bodes well for consumer spending and its ability to power the economic recovery through a period marred by a violent spike in virus cases. Record-low mortgage rates, reflecting the ultra-easy Fed policy, have prompted a steady wave of refinancing and allowed homeowners to reduce monthly payments or tap equity. Americans are also holding more cash, helped in part by stimulus from the government.


Risk Information:
Investing involves risk, including risk of loss.
Diversification does not ensure a profit or guarantee against loss.

Disclosures:
Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, and other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Carillon Tower Advisers or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professional advisers. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

Earnings per share (EPS) is calculated as a company’s profit divided by the outstanding shares of its common stock. The resulting number serves as an indicator of a company’s profitability.

Blended earnings combine actual results for companies that have reported earnings and estimated results for companies that have yet to report.

Standard Deviation is a measure of the dispersal or uncertainty in a random variable. For example, if a financial variable is highly volatile, it has a high Standard Deviation. Standard Deviation is frequently used as a measure of the volatility of a random financial variable.

The American Association of Individual Investors asks its members every week whether they feel bullish, neutral, or bearish about the direction they expect the stock market to take in the coming six months. Survey results offer insight into the mood of individual investors.

The S&P 500 Index measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested. The S&P 500 represents approximately 75% of the investable U.S. equity market.

The Nasdaq 100® includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq stock market based on market capitalization.

The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 8 percent of the total market capitalization of the Russell 3000® Index.

The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92 percent of the total market capitalization of the Russell 3000® Index.

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap is a subset of the Russell 1000® Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap represents approximately 31% of the total market capitalization of the Russell 1000 companies.

Frank Russell Company (Russell) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor, or endorse the content of this communication.

 


 

CTA20-0750 Exp. 3/16/2021



November 9, 2020: Lesson of vaccine news: Lean into cyclicals, but don’t sell growth

Market indices skyrocketed Monday morning on positive data on a potential COVID-19 vaccine: It was found to be more than 90% effective in preventing infections among trial volunteers. Matt Orton, CFA, Director and Portfolio Specialist at Carillon Tower Advisers, views this as a sign that – despite COVID-19 cases rising again – the path for the market will likely trend higher.

“The timeline for a vaccine hasn’t actually changed,” Orton said. “What has changed is the efficacy data of this particular vaccine, and the sense that we may start getting approvals for these drugs that can really help combat the spread of the virus.” The company still needs to wait for sufficient safety data to file for emergency use authorization, which should occur in the third week of November.

Quote Image
Active managers and stock-pickers can help provide balance in a client’s portfolio between owning momentum and owning quality.

The vaccine news provided a pop for airline stocks and other travel and leisure companies beaten down by the pandemic. Equities and Treasury yields are both soaring, and oil and industrial metals are also rising. However, Orton cautions that the vaccine news is not a decisive binary event, but rather an incremental positive that chips away at uncertainty.

“We’ve been talking for months about leaning into cyclicality while still favoring growth, and I think that profile continues to make sense,” Orton said. “Active managers and stock-pickers can help provide balance in a client’s portfolio between owning momentum and owning quality. I believe this strategy will hold up better. At the end of the day, there are still incredibly strong secular growth themes that will play out regardless if we’re staying at home, but we need exposure to the real economy as well.”

Quote Image
If there are more shutdowns, we could see another rush into defensive stocks...

Orton continues to like small-cap stocks given their leverage to U.S. economy. Small caps and cyclicality have been outperforming since early September, buoyed by anticipation for increased fiscal spending under a “blue wave” scenario. While the ultimate outcome of the election didn’t play out exactly as anticipated, the positive vaccine developments certainly provide a great deal of optimism on the economy going forward. Orton also has his eye on mid-cap stocks, which historically perform well on a relative basis in recovery environments and have been outperforming the other market capitalizations since the market bottom in March.

Strong payroll data also provided support for those arguing for lower fiscal stimulus, and it highlights that the real driver of this recovery has, and will likely continue to be, the Fed. While the momentum of the recovery has been stronger than expected, the Fed remains committed to near-zero rates and is on standby should additional measures be necessary.

“There is still a lot of uncertainty,” Orton said. “COVID-19 cases continue to surge across the country and there is potential for some type of restrictions in many states. If there are more shutdowns, we could see another rush into defensive stocks, and this is why it makes sense to keep your secular growers.”

Global stocks, especially those in Asia, appear likely to hit fresh all-time highs soon, as investors begin to embrace the prospect of an end to Trump’s America First policies. The MSCI All-Country World Index (ACWI) and the MSCI AC Asia Pacific excluding Japan Index are on course to set new peaks on a closing level, building on last week’s risk-on momentum. This rally still leaves plenty of upside room as investors remain effectively underweight stocks outside the U.S. Positive vaccine news will also benefit these regions, particularly those with more exposure to emerging markets which have been hard hit by COVID-19.

Global stocks rise, anticipating U.S. policy change

Global stocks rise, anticipating U.S. policy change 

Source: Bloomberg, as of 11/6/2020

“Balance is key,” Orton continued. “For investors looking to redeploy capital, I believe there are pockets of the market that haven’t caught up, and down-market cap opportunities. That is, again, where active management and stock-picking can be important.”


Risk Information:
Investing involves risk, including risk of loss.
Diversification does not ensure a profit or guarantee against loss.

Disclosures:
Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, and other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Carillon Tower Advisers or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professional advisers. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

The MSCI ACWI® (All Country World Index) measures the performance of large and mid-cap stocks across 23 developed markets (DM) and 24 emerging markets (EM) countries.

The MSCI AC Asia ex Japan Index captures large and mid cap representation across 2 of 3 Developed Markets (DM) countries (excluding Japan) and 9 Emerging Markets (EM) countries in Asia. With 1,184 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.

DM countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US. EM countries include: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.

EM countries include: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.

 

CTA20-0736 Exp. 3/9/2021



November 2, 2020: The election is not your best guide to the market

It’s a big week for the United States, but there are better guides to the market than the outcome of the election, said Matt Orton, CFA, Director and Portfolio Specialist at Carillon Tower Advisers.

“Whether we have a result at the end of Tuesday is unknown,” Orton said, “but making predictions on the market or investing based on who we think is going to win and potential policies over the long term is just not a way to invest.”

Instead, Orton said, “it’s worth taking stock of where we are now.” Even though last week ended on a sour note with the S&P 500 down more than 5.5% and small-caps underperforming, Orton said he sees signs that the market is positioning itself for further gains. During October, markets essentially made a round trip, starting off strong only to give back gains in the back half of the month. That said, small caps actually outperformed, and both small and mid caps ended the month in positive territory. Net inflows also remained positive down marketcap, and the fact that investors were still willing to put money to work in both of those spaces “sends a positive signal overall about where we think the economy is and where we think it will go regardless of who is in the White House,” Orton said.

Quote Image
We have a good tactical opportunity to look at areas for re-deploying capital once we get through some of these volatility events.

Meanwhile, “people are starting to move into the market and position for future gains,” Orton said. S&P 500 net long e-mini futures positioning hit a two-year high last week, and net short futures positioning by non-hedgers continued to move lower on the Chicago Board Options Exchange Volatility Index (VIX). All of this signals there might be some more support for markets going forward once we move past all of the event risk this week, Orton said.

Quote Image
There’s definitely pockets of opportunity in the market.

One reason for this bullish positioning is that earnings season has been incredibly strong, Orton said, though “it’s been totally overshadowed by what’s been going on with respect to elections, fiscal stimulus, and lockdowns starting to happen in Europe.” As of the start of this week, 64% of S&P 500 companies have now reported results, with 86% reporting a positive earnings per share (EPS) surprise and 81% reporting a positive revenue surprise. This marks the strongest beat percentage since FactSet started tracking the metric in 2008.

Third quarter S&P 500 earnings surprise percentages, by sector

Third quarter S&P 500 earnings surprise percentages, by sector 

Source: Factshet, as of October 30, 2020

Even more significant, Orton said, has been that the blended earnings decline also continues to improve. It now stands at -9.8% year-overyear, compared with the -21.0% expected at the end of the third quarter. This significant beat shouldn’t go unappreciated, Orton said. It’s also worth noting that only 34% of the 212 S&P 500 companies that have held earnings calls have mentioned the word “election” on conference calls. Additionally, only 25% of that subset (that is, 18 out of the 212) have mentioned potential tax implications and the impact it could have on their growth profile in the future.

“I think that’s meaningful, because if that were going to be an issue, they would probably be highlighting that right now, especially if it was going to hurt their ability to beat expectations going forward,” Orton said. So “regardless of how the election shakes out, management is still confident in the overall trajectory of where their companies are going, and that is up.”

Given how far markets moved last week, Orton said he thinks “we have a good tactical opportunity to look at areas for re-deploying capital once we get through some of these volatility events. Technical indicators are showing oversold conditions, and the volatility risk premium is quite elevated.” He said small caps continue to look undervalued, mid caps are still outperforming coming off the market bottom, and large-cap tech could present an opportunity where companies have posted strong earnings but have yet to be rewarded for it.

“There’s definitely pockets of opportunity in the market,” Orton said. “You have to look through the shorter term volatility and use it opportunistically, because fundamentals remain strong, earnings are strong, and interest rates are going to remain low. All of that is supportive to the markets going forward.”


Risk Information:
Investing involves risk, including risk of loss.
Diversification does not ensure a profit or guarantee against loss.

Disclosures:
Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, and other expenses, which would reduce performance. Indexes are unmanaged. It is not possible to invest directly in an index. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce return.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature, or other purpose in any jurisdiction, nor is it a commitment from Carillon Tower Advisers or any of its affiliates to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical, and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and you should not rely on it in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and make their own determinations together with their own professional advisers. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions, and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

Blended earnings combine actual results for companies that have reported earnings and estimated results for companies that have yet to report.

Futures contracts allow investors to buy or sell an asset at a predetermined price at a specified time in the future. Investors take long futures positions when they expect the price of a stock, commodity, or currency to rise, and short positions when they expect its value to fall.

The S&P 500 Index measures changes in stock market conditions based on the average performance of 500 widely held common stocks. It is a market-weighted index calculated on a total return basis with dividend reinvested. The S&P 500 represents approximately 75% of the investable U.S. equity market.

S&P 500 E-mini Futures make up about a fifth of the S&P 500 Futures, which offer a type of derivative contract where the price is based on the expectation of the S&P 500 Index’s future value. E-mini futures were created to allow for smaller investments by a wider range of investors.

The Chicago Board Options Exchange (CBOE) Volatility Index, or VIX, is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility. Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors’ sentiments.

CTA20-0723 Exp. 3/2/2021