Tactical Short 2nd Quarter 2025 Recap

McAlvany Weekly Commentary

David: Good afternoon. This is David McAlvany. Thank you for participating in our second quarter 2025 recap conference call titled "Terminal Phase Whipsaw." As always, thank you to our valued account holders. We so greatly value our client relationships. Today, we will review performance. Doug will go through market commentary. We'll end with Q&A. And most of the questions have been submitted ahead of time. If there's something that you would like for us to comment on, you can certainly send a further question to [email protected]. It's [email protected], or you can schedule a call with myself or Doug and we’d be happy to visit with you offline. With first time listeners on today's call, we'll begin with some general information for those unfamiliar with Tactical Short. And more detailed information is available at mwealthm.com/TacticalShort. The objective of Tactical Short is to provide a professionally managed product that reduces overall risk in a client's total investment portfolio, while also providing downside protection in a global market backdrop with extraordinary uncertainty and extreme risk. The strategy is designed for separately managed accounts. It is investor friendly with full transparency, flexibility, reasonable fees, and no lockups. Shorting entails a unique set of risks. We're set apart by our analytical framework and our uncompromising focus on identifying and managing risk. Our Tactical Short strategy began and ended the quarter with short exposure targeted at 82%, focused on the challenging backdrop for managing short exposure. A short in the S&P 500 ETF, the SPY, remains the default position for high-risk environments. Here's the update on performance. Tactical Short accounts after fees returned a negative 8.56% during Q2. The S&P 500 returned a positive 10.94%. So for the quarter, Tactical Short accounts lost 78% versus the 82% target at 78% of the inverse of the S&P 500's positive return. As for one year performance, Tactical Short after fees returned a negative 10.52% versus the 15.14% return for the S&P-500, the Tactical Short losing 69.5% of the S&P-500's positive return. We regularly track Tactical Short performance versus three actively managed short fund competitors. First, the Grizzly Short Fund, which returned negative 7.12% during Q2. Over the last year, Grizzly returned a negative 9.19%. Ranger Equity Bear Fund returned a negative 5.05% for the quarter with a negative 11.41% as a one -year return. And Federated Prudent Bear Fund returned a negative 10.25% during Q2 and negative 9.21% for one year. Tactical Short underperformed the actively managed bear funds for the quarter on average by 109 basis points. Tactical Short underperformed over the past year by an average of 58 basis points. Tactical Short has significantly outperformed each of the bear funds since inception from April 7th, 2017, its inception, through the end of June. Tactical Short outperformed each of the three competitors by an average of 1,733 basis points or 17.33 percentage points. There are also the passive short index products, the ProShares S&P 500 ETF, which returned a -10.03% for the quarter and a negative 8.88% over the past year. The Rydex Inverse S&P 500 Fund returned a negative 10.13% during Q2 and negative 8.78% for one year. And then there's also the PIMCO StocksPLUS Short Fund with a second quarter return of negative 10.29% and a one-year return of negative 6.97%. Doug, over to you. Doug: Thanks David. Good afternoon. Thank you for being with us today. Before diving into this wacky environment, let's start with performance. It was one of those extremely challenging quarters. Early April market instability appeared serious. The period began with acute market weakness following April 2nd Liberation Day tariff pronouncements. The S&P 500 suffered a two-session 10.5% plunge, the worst sell-off since March 2020. The banks sank 15.8% and the broker dealers lost 13.3% in two days.