Tactical Income Commentary

September 2022

The move higher in long-term yields that started in August only accelerated in September, adding to the declines throughout most of the fixed income landscape. Headline CPI inflation came in hotter than expected, which  immediately moved the odds of another 75 basis point rate hike from the Fed to 100%. In addition to another 75 basis point rate hike, Fed governors continued to ratchet up their hawkish commentary. The latest came from Cleveland Fed President Mester, who said that “policy rates are still not yet at the restrictive level”, meaning a level that is above the rate of inflation.

The problem with that is the rate hikes work their way into the economy with a long and variable lag – maybe 9-12 months – so all these rate hikes will continue to dampen growth well into 2023. Since we already see economic growth contracting, it follows that the Fed is hiking right into the teeth of a slowdown. While many won’t admit that this is intentional, we think the Fed is well aware of the oncoming recession but sees it as the only way to snuff out the highest inflation rates in a generation.

Past performance does not guarantee future results.

While the Fed is trying to hike rates as fast as they can to bring down current inflation, forward looking expecatations for inflation have already come down. The chart above shows the 5-year inflation expectations levels, which peaked back in April and have come down considerably. So the bond market doesn’t view longterm inflation as a problem. And while it’s hard to gleen that from the recent moves in the 2-year Treasury note, the deeply inverted yield curve is signaling that the Fed is being too restrictive and recession is coming.

Of course, it isn’t just the Fed. Central banks around the globe are also tightening monetary policy as fast as their markets can handle. And in some cases their markets can’t handle it. Case in point is the U.K. In response to record high inflation, the Bank of England hiked rates so quickly that is almost caused a financial accident in their overleveraged pension system. Liquidity became so bad that the BoE had to step in and reverse its asset sales and actually start buying bonds again just to calm markets.

Past performance does not guarantee future results.

Because most investors don’t pay attention to volatility levels in the bond market, the way they do with equities, it might surprise some to know that bond market volatility has reached the same levels it did during the Covid shutdown panic in March 2020. You can see this in the chart above of the MOVE Index, which measures bond volatility the same way the VIX measures stock market volatility.

Extreme levels of market volatility like this can even make life difficult for tactical strategies, in the sense that there are often false starts to what look like promising new rallies, only to see them rollover and fail in short order. This is why we continue to hold record cash levels, as high as 80% at times, to err on the side of caution. But those cash levels will be a huge asset when we finally do see a more durable turn higher in the market.

The ACM Tactical Income Fund (TINIX) returned -1.58% in September, a much smaller decline than the Barclays Agg which was down -4.32%. The Fund has returned -7.61% YTD, which remains far less than the Bloomberg AGG which is down -14.61% this year. Keeping declines manageable remains paramount in this market.

We want to thank all of you for your continued support.

Sincerely,

Jordan L. Kahn, CFA
Chief Investment Officer

Sources: Standard & Poor’s, Stockcharts.com, Briefing.com

Performance is historic and does not guarantee future results. Investment principal value will fluctuate with changing market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month end performance information or the Fund’s prospectus please call the fund at 1- 844-798-3833. You can also obtain a prospectus at www.ACM-funds.com.

Risk Disclosure:

Investors should carefully consider the investment objectives, risks, charges and expenses of the ACM Dynamic Opportunity Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-844- 798-3833. The prospectus should be read carefully before investing. The ACM Dynamic Opportunity Fund is distributed by Northern Lights Distributors, LLC, member.”http://www.finra.org/” FINRA. “http://www.sipc.org/” SIPC. Northern Lights Distributors, LLC and Ascendant Capital Management, LLC are not affiliated.

Investors are not able to invest directly in the indices referenced and unmanaged index returns do not reflect any fees, expenses or sales charges. For current performance information, please visit our performance page: https://acm-funds.com/tactical-income-performance/

There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses.

ETF’s are subject to specific risks, depending on the nature of the underlying strategy of the fund. These risks could include liquidity risk, sector risk, as well as risks associated with fixed income securities, real estate investments, and commodities, to name a few. Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards.

9360-NLD-09/16/2022

September 2022 Fact Sheet

The ACM Tactical Income Fund is designed as a core investment for investors seeking income generation, while also focusing on capital preservation. The fund employs a tactical strategy which aims to capture attractive income opportunities and mitigate downside risk when markets experience downturns.

We strive to help our investors participate in the gains available from financial markets, while mitigating the downside risk.

PERFORMANCE As of 9/30/2022
1-mth 3-mth YTD 1 Yr* 3 Yr* Since Inception*
TINIX -1.58% -2.04% -7.61% -8.76% -0.28% 1.06%
Bloomberg US Agg Bond -4.32% -4.75% -14.61% -14.60% -3.26% 0.47%
Morningstar NT Bond -2.34% -1.69% -8.17% -8.23% -0.55% -4.02%

*As of 9/30/22

Investments in mutual funds involve risks. Performance is historic and does not guarantee future results. Investment principal value will fluctuate with changing market conditions so that when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. To obtain the most recent month end performance information or the Fund’s prospectus please call the fund at 1-844-798-3833. You can also obtain a prospectus at www.ACM-funds.com.

The fund’s maximum sales charges for Class “A” shares is 5.75%. Actual Total Annual Fund Operating Expenses are 2.36% for Class A and 2.11% for Class I shares. The adviser has contractually agreed to reduce its fees and reimburse expenses of the Fund, at least until April 30, 2022, to ensure that the net annual fund operating expenses will not exceed 2.07% for Class A shares and 1.82% for Class I shares, subject to possible recoupment from the Fund in
future years.

Please review the fund’s prospectus for more information regarding the fund’s fees and expenses. For performance information current to the most recent month-end, please call tollfree 1-844-798-3833

Sector Weightings

As of 9/30/2022


There is no assurance that the Fund will achieve its investment objectives.

Risk Disclosure:

Investors should carefully consider the investment objectives, risks, charges and expenses of the ACM Dynamic Opportunity Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-844- 798-3833. The prospectus should be read carefully before investing. The ACM Dynamic Opportunity Fund is distributed by Northern Lights Distributors, LLC, member.”http://www.finra.org/” FINRA. “http://www.sipc.org/” SIPC. Northern Lights Distributors, LLC and Ascendant Capital Management, LLC are not affiliated.


Mutual funds involve risk including possible loss of principal. Adverse changes in currency exchange rates may erode or reverse any potential gains from t he Fund s Investments. ETF s are subject to specific risks, depending on the nature of the underlying strategy of the fund. These risks include liquidity risk, sec to r risk, as well as risks associated with fixed income securities, real estate investments, and commodities, to name a few. Investments in underlying funds that own s mall and mid capitalization companies may be more vulnerable than larger, more established organizations. Derivative instruments involve risks different from, or possibly great er than, the risks associated with investing directly in securities and other traditional investments. Investments in foreign securities could subject the Fund to greater risks incl u ding, currency fluctuation, economic conditions, and different governmental and accounting standards. In addition to the risks generally associated with investing in securities of foreign companies, countries with emerging markets also may have relatively unstable governments, social and legal systems that do no t protect share holders, economies based on only a few industries, and securities markets that trade a small number of issues.

Investors bear the risk that the Fund may not be able to implement its investments strategies or attract sufficient assets. Purchased put options may decline in value or expire worthless and may have imperfect correlati0on to the value of the Fund’s portfolio securities. Written call and put options may limit the Funds paticipation in equity market gain s and may amplify losses in market de declines. The Fund’s losses are potentially large in a written put or call transaction. If unhedged, written calls expose the Fund to potentially unlimited losses. The Fund w ill incur a loss as a result of a short position if price of the short position instrument increases in value between the date of the short position sale and the date on which an off setting position is purchase. Short positions may be considered speculative transactions and involve special risks, including greater reliance on the ability to accurately anticipate the future value of a security of instrument. The Fund s losses are potentially large in a short position transaction.

Beta is a measure of systemic risk. Standard Deviation is a statistical measurement. It sheds light on the historical volatility of that investment. The greater the standard deviation of a security, the greater the variance between each price and the mean, indicating a larger price range.

The Bloomberg U.S. Aggregate Bond Index is an unmanaged, fixed income, market-value-weighted index generally representative of investment grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgagebacked securities with maturities of at least one year. The  Bloomberg U.S. Aggregate Bond Index figures do not reflect any fees,  expenses, or taxes. An investor cannot invest directly in an index.

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