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MLM Symmetry™ - Quarterly Commentary
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MLM Symmetry 2018 2nd Quarter Commentary

Fund Overview 
The MLM Symmetry Fund rose 1.1% during the quarter, gross of fees, taking the compound annual rate of return since inception in September 2014 to 5.9%. This compares to the MSCI World annualized return of 7.4% and the Barclays US Aggregate Bond Index annualized return of 1.6%.

Performance Drivers 
Both the Investment Risk and the Price Risk portfolios gained during a choppy quarter for markets. Continued outperformance of our equity basket in the US helped on the Investment Risk side of the book - for all the talk of the death of value investing, we aren't experiencing it that way. Our blend of fundamental metrics, portfolio construction and concentration in the most value-y names is bucking that trend. Long may it continue. While the broad indices are certainly not screaming bargains, if you dig enough there are seams of value. As we don't constrain our sectors the way others do as to not deviate too far from the benchmarks, we are able to mine a good amount of that value. In our view, this premium is driven by the same behavioral biases as they ever were - an overextrapolation of bad news priced into the future, and an underappreciation of the resilience of companies. When priced for disaster, a change in tone to just less disastrous or steps taken to alter the course of a business can have an outsized impact on prices. On the Price Risk side, commodity and fixed income exposures contributed positively, currencies lost some ground.

To our eye, global markets are trying to thread a needle between cyclically strong US growth - that may be inflecting structurally upwards as well - and a combative US administration trying to realign decades of economic activity to be more domestically advantageous. The last few decades have seen trade and financial interconnectedness increase dramatically. Put simply, emerging markets have become the world's factories, the resource rich parts supply the inputs and the developed world, and some burgeoning middle classes in the other countries, set the pace either through risk appetite led business and consumer spending, or fiscal deficits. Mess with it too much at your peril. The end game seems reasonably clear - a general reduction in barriers and reorientation. A look at US equity returns, which are generally holding near highs, compared with returns in emerging market stocks and bonds shows how the markets are evaluating the end results. Clearly activity levels are very strong currently in the US, the second quarter GDP numbers will likely be the highest in years, and the fiscal stimulus from increased government spending and tax cuts will provide fuel for the near term. If there was ever a "good" time to attempt what the President is aiming at, it would be now. The worries though are well founded - we don't know how other countries will react to the broadsides, how far they will go and for how long. Perhaps most importantly, while the actual economic hit from tariffs when you look at the numbers isn't huge, the second order impact on confidence and investments under uncertainty may be much larger. So, risk market multiples are under some pressure at a time earnings are solid. Markets are oscillating between the two points of view, waiting and watching, in our view overly sensitive to the headline tennis. You certainly do not want to squander the confidence boost from the tax reform package. We think things work themselves out, ugly as it may look - but the clock is likely ticking.

For further information please contact:
Raymond E. Ix, Jr.
Senior Vice President