MLM Symmetry™ - Quarterly Commentary
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MLM Symmetry 2018 3rd Quarter Commentary

Fund Overview 
The MLM Symmetry Fund rose 3.2% during the quarter, gross of fees, taking the compound annual rate of return since inception in September 2014 to 6.4%. This compares to the MSCI World annualized return of 8.3% and the Barclays US Aggregate Bond Index annualized return of 1.5%.

Performance Drivers 
Both sides of the Symmetry portfolio contributed to returns in the third quarter. Equity markets in the US finished at record highs, Japan the highest in decades, while Europe remains range bound. Emerging markets continue to struggle, our approach has largely stood aside during this down move. We hold baskets of stocks with markedly cheaper fundamentals than the broader markets that are likely to benefit from further economic growth. The strategy combines value and momentum equity selections; we believe a combination of the two is more attractive than either alone. Momentum did particularly well in the US, led by Progressive, Verisign and Xylem. The value selections were positive as well, with Andeavor, CenturyLink and Best Buy among the gainers. In Japan, industrial stocks Marubeni and JFE Holdings did well. The diversified credit portfolio did fine, despite holding a reasonably defensive stance. Having shifted to shorter duration exposures aided in this regard. The Price Risk side picked up the continued downward shift in sugar prices through both the trend and futures curve shape models, and also participated in the upward move in energy markets.

The world, at present, is bifurcated. The Chairman of the US Federal Reserve recently described the US economy as being in "extraordinary times." Who are we to argue with that? Manufacturing and Service sector surveys remain strong, holding at high levels these past few months even as trade rhetoric and tariff action have risen. An enormous corporate tax cut and reform package coupled with a personal tax reduction will do that. To investors looking just at the US things look good, with US stocks ending the quarter at record highs. 9% sales growth year-over-year has more than doubled the 4% rate the expansion had been generating, and current expectations for the fourth quarter of 2018 are north of 25% over 2017. Looking overseas though, it is a different and less rosy picture. European equity markets still trade below 2007 levels, Italian concerns are resurfacing...again. The Brexit process is uncertain to say the least. Emerging markets have been hit hard as rising US interest rates, weakening currencies, harsh trade rhetoric and a series of political problems have come together to form a tough landscape. The days of not earning anything at the low risk end of the spectrum and there being no alternative however are behind us - safety now pays nearly 3%. The potential for bonds to make gains in the event of a slowdown if rates were cut is also higher. This will no doubt alter the asset allocation framework of investors after years of very low interest rates.

Where things go from here is anyone's guess. The US data still looks solid. Our view is that the economy can withstand higher interest rates at this point and that conditions remain fairly easy. Real rates are not historically high. The debate around the level at which they will start to bite is a central question. If neutral is really as low as the pessimistic estimates out there, then the Fed will be in restrictive territory soon and some of the data in the interest rate sensitive areas of the economy will start to moderate. If it never was that low or is rising quickly given the stimulus and resurgent animal spirits, then they have a ways to go. We think it is closer to the latter than the former. What this means for the level of the USD and non-US markets that have to contend with rising US interest rates will be key for non-US markets, as will the resolution or ratcheting up of trade threats. How the politics of all of this plays out is also important. We think things will sort themselves out and that the US cycle has more room to run. We aren't in the third inning, but we think that the consensus view of pessimism is too strong and pervasive. These are interesting times.

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