How Well Does Your Bond Fund Handle Stress?

Selecting a bond fund for your client’s portfolio is not easy. Advisors must determine what role a fund plays within the portfolio and how it fits together with other holdings to achieve the client’s objectives. What is the client’s risk profile? And how important is income relative to capital appreciation?

Advisors often rely on their firm’s gatekeepers and other investment allocators that employ a variety of factors in selecting bond funds for their models and clients. These factors include, among others: fund size, fees and expenses, experience of the fund management team, risk profile and, of course, performance track record. These items – which are both quantitative and qualitative — certainly are an important part of any robust diligence process. But we believe evaluating how a bond fund performs through stressful market conditions is one of the most important factors to consider.

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Important Information

It is possible to lose money by investing in a fund. Past performance does not guarantee future results. Investors should consider a fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about a fund. To obtain a prospectus, visit www.sheltoncap.com or call (800) 955-9988. A prospectus should be read carefully before investing. Mutual fund investing involves risk, including possible loss of principal.

Credit-related instruments typically decrease in value when interest rates increase. Concentration in a small number of issuers increases the risk that one issuer could have a large adverse impact on the Fund’s return. Borrowing and frequent trading could increase the Fund’s operating expenses. High-yield bonds involve greater risk of default, and may be more volatile and less liquid than investment grade securities. Subordinated and unsecured loans may be disproportionately affected by default and downgrade. Foreign investments may be adversely affected by currency fluctuations, lower liquidity, tax regulation, and political instability. Derivatives can be highly illiquid and difficult to unwind.

The Fund’s short positions may equal up to 100% of the Fund’s net asset value. Short sales theoretically involve unlimited loss potential since the market price of securities sold short may continuously increase.

Distributed by RFS Partners, a member of FINRA and affiliate of Shelton Capital Management. Investments are not FDIC insured or bank guaranteed and may lose value.