To the clients and friends of ProfitScore:

At ProfitScore, our trading approach is guided by market Regimes. While various factors influence our specific trading decisions, understanding the market’s current state or regime is a key component in how we position our portfolio.

Many of you have inquired about how volatility affects our exposure so I am going to do a short explanation.  So here is a breakdown of the different states of the ProfitScore PSRAE strategy and the AXSPX fund that tracks it.

Low Volatility Regime

In a low-volatility environment, you can expect us to be either long or in cash. On average, the low volatility regime accounts for approximately 50% of all trading days. Below is a breakdown of the low volatility regime and its driving factors:

82% of time long
18% of time in cash

Neutral Regime

Markets do not always shift directly from high to low volatility; instead, they generally transition through what we call the neutral regime. Historically, this state has comprised about 30% of trading days. During the neutral regime, we may take long, short, or cash positions depending on market conditions.  Below is a approximate detailed breakdown of the neutral regime:

52% of time long
24% of time short
24% of time in cash

High Volatility Regime

High volatility is generally characterized by heightened market fear, resulting in significant price swings and erratic movements. This regime provides opportunities to capitalize on market inefficiencies. The high volatility state has historically represented around 20% of trading days, with positions varying between long, short, or cash based on the market’s behavior.  Below is the detailed breakdown of the high volatility regime:

36% of time long
28% of time short
36% of time in cash

Diversification Strategy

  • Context: With the proliferation of indexing, where a single investment can be spread across hundreds of assets at the touch of a button, finding investments that enhance diversification is becoming harder to find. 
  • ProfitScore’s Approach: By focusing on strategies that offer additional correlation diversity, ProfitScore aims to provide unique value in addition to what traditional indexing can offer.

The ProfitScore strategy attempts to adapt to varying market conditions, aiming to optimize performance across different volatility regimes. The emphasis on diversification aligns with the broader goal of mitigating risk and capturing opportunities regardless of market dynamics.
We hope this overview clarifies our trading approach and diversification strategy. As always, please feel free to ask any questions or if you need further information.

IMPORTANT RISK DISCLOSURE AXSPX FUND
Risk is inherent in all investing, and you could lose money by investing in the Fund. There can be no assurance that the Fund will achieve its investment objectives.  ProfitScore Regime-Adaptive Long /Short Equity (PSRAE) is a highly liquid, systematic index managed by ProfitScore Capital Management. It trades U.S. Equity Index securities (long and short) and cash equivalents based on whether the market regime for U.S. equities is experiencing low volatility or high volatility.
Derivatives Risk: The use of derivatives, including options and swaps, exposes the Fund to leverage, liquidity, valuation, market, counterparty and credit risks. Derivatives transactions can be highly illiquid and difficult to unwind or value, they can increase Fund volatility, and changes in the value of a derivative held by the Fund may not correlate with the value of the underlying instrument or the Fund’s other investments. The Fund may enter into swap transactions. A swap contract is a commitment between two parties to make or receive payments based on agreed upon terms, and whose value and payments are derived by changes in the value of an underlying financial instrument.
Leveraging Risk: Certain Fund transactions, such as entering into futures contracts, options and short sales, may give rise to a form of leverage, which can magnify the effects of changes in the value of the Fund’s investments and make the Fund more volatile.
LIBOR Risk: Many financial instruments, financings or other transactions to which the Fund may be a party use or may use a floating rate based on the London Interbank Offered Rate (“LIBOR”).
Fixed Income Securities Risk: The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to changes in an issuer’s credit rating or market perceptions about the creditworthiness of an issuer.


Investors should carefully consider the investment objectives, risks, charges and expenses of AXS Adaptive Plus Fund. This and other important information about the Fund is contained in the Prospectus, which can be obtained by visiting www.axsinvestments.com. The Prospectus should be read carefully before investing.

Important PSRAE Index disclosure information: Past performance of a ProfitScore index is not an indication of future results. You cannot invest directly in any ProfitScore index. Performance of any ProfitScore index does not represent actual fund or portfolio performance. A fund or portfolio may differ significantly from the securities included in an index. A decision to invest in any such fund or portfolio should not be made in reliance on any of the statements set forth in this email or the ProfitScore website. Inclusion of a security within any ProfitScore index is not a recommendation by ProfitScore to buy, sell, or hold such security, nor is it considered to be investment advice. Index performance does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions would reduce returns. ProfitScore receives compensation in connection with licensing rights to its indices. All information relating to any ProfitScore index is impersonal and not tailored to the specific financial circumstances of any person, entity or group of persons. Index methodologies are available upon request to ProfitScore.

No Solicitation of Investment Advice: ProfitScore is not offering or rendering investment or financial planning advice through this email or the ProfitScore websites. This email is limited to dissemination of general information about ProfitScore’s services and as a means of contacting us. Data and information are provided for informational purposes only, and are not intended for trading purposes. ProfitScore gives no warranty, express or implied, as to the accuracy, reliability, utility, or completeness of any information contained in this website. Neither ProfitScore nor any of its data or content providers shall be liable for any errors or delays in the content or for any actions taken in reliance thereon. ProfitScore is not responsible for the contents of any website linked to this email. ProfitScore reserves the right at any time, and without notice, to change, amend, or cease publication of the Indices.Copyright © ProfitScore Capital Management, Inc. 2004-2024. All rights reserved. This material is proprietary and may not be reproduced, transferred or distributed in any form without the prior written consent of ProfitScore.