$JOJO: A Meaningful Satellite Position for Tactical Bond Allocation
Description
Bond investors have discovered that “steady income” can be anything but steady. After 2022’s record losses in fixed income, volatility and uncertainty remain defining traits of the bond market. Even as yields retreat from multi-year highs and Treasury volatility (tracked by the MOVE Index) hits its lowest level in four years, few investors are ready to declare victory. The Federal Reserve’s pivot from rate hikes to easing has calmed markets temporarily, yet credit conditions are potentially worsening beneath the surface.
In this environment, traditional bond strategies—buy and hold, set and forget—may struggle to adapt. Credit spreads remain narrow, signaling that investors still are not being fully compensated for risk. Defaults among leveraged borrowers and “payment-in-kind” deals, where companies pay interest with IOUs rather than cash, hint at broader weakness ahead. As JPMorgan’s Jamie Dimon quipped, “when you see one cockroach, there’s probably more.” Such tremors in high-yield and private credit highlight the need for tactical flexibility.
The Fed’s policy reversal underscores a changing market regime. With growth cooling and layoffs increasing—Amazon’s 14,000-job cut being one example—investors are transitioning from concerns about interest-rate risk to worries about credit risk. Private credit, now a $1.5 trillion market, has yet to endure a true downturn. Should stress in that shadow-lending world spill into public credit, liquidity could tighten rapidly. For advisors and portfolio managers, the challenge is balancing offense (yield capture) with defense (capital preservation).
One practical framework is the core-satellite model. The core comprises high-quality, lower-volatility bonds—such as Treasurys or investment-grade corporates—providing ballast. Around that foundation, investors may allocate a modest satellite sleeve (often 10–20 percent of fixed income) to tactical or higher-yield strategies that can pursue opportunity while managing risk dynamically. The objective is not prediction but preparation: maintaining exposure that can adjust when market winds shift.
Enter the ATAC Credit Rotation ETF (ticker: JOJO). This fund operationalizes that tactical mindset through a rules-based “Credit-On / Credit-Off” framework. Rather than remaining static, JOJO rotates between two opposite exposures: high-yield corporate bonds in risk-on periods and U.S. Treasuries when conditions turn defensive. Its signal derives from the relative strength of utilities stocks versus the broader equity market—a relationship that has historically foreshadowed volatility. When utilities outperform, JOJO shifts into Treasurys; when they lag, it re-engages high-yield exposure.
The performance data quoted above represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted above. Performance current to the most recent month-end and standardized performance can be obtained by calling (855-282-2386) or visiting https://atacfunds.com/jojo/.
The appeal of such an approach lies in its adaptability. Many bond funds are permanently tied to one risk profile; JOJO instead acts as a thermostat—dialing risk up or down automatically. While no model avoids occasional whipsaws, the goal is steadier risk-adjusted performance over a full cycle. For portfolio construction, JOJO works best as a satellite, not a core holding—complementing traditional bond exposures while providing tactical responsiveness to changing macro signals.
In an era defined by policy pivots, credit stress, and late-cycle uncertainty, JOJO embodies a disciplined way to stay invested without being complacent. It reminds investors that in bonds, as in weather, seasons change—and preparedness often matters more than prediction.
Footnotes
“U.S. Bond Market Losses Since 1976,” Wikimedia Commons, NY Stock Exchange Traders Floor LC-U9-10548-6.jpg
“High-Yield Defaults: Canary in the Coal Mine?,” Charles Schwab
“ATAC Credit-On / Credit-Off Index | JOJO,” MarketVector Indexes
The Fund’s investment objectives, risks, charges, expenses and other information are described in the statutory or summary prospectus, which must be read and considered carefully before investing. You may download the statutory or summary prospectus or obtain a hard copy by calling 855-ATACFUND or visiting www.atacfunds.com. Please read the Prospectuses carefully before you invest.
Junk debt, also known as high-yield bonds or speculative-grade debt, refers to fixed-income securities issued by companies or governments with lower credit ratings, offering higher interest rates to compensate investors for the elevated risk of default.
Duration measures a bond’s sensitivity to interest rate changes, representing the weighted average time it takes to receive all cash flows from the bond.
The VIX index, often called the "fear gauge" of Wall Street, is a real-time market index that measures the market's expectation of 30-day forward-looking volatility derived from S&P 500 index options prices, serving as a key barometer of investor sentiment and market risk.
The MOVE Index measures the implied volatility of U.S. Treasury yields, often viewed as the bond market’s equivalent of the VIX for stocks.
The ICE BofA BB US High Yield Index Option-Adjusted Spread measures the yield differential between BB-rated corporate bonds and a spot Treasury curve, quantifying the risk premium for below-investment-grade debt with a BB rating in the US market.
As with all ETFs, Fund shares may be bought and sold in the secondary market at market prices. The market price normally should approximate the Fund’s net asset value per share (NAV), but the market price sometimes may be higher or lower than the NAV. The Fund is new with a limited operating history. There are a limited number of financial institutions authorized to buy and sell shares directly with the Fund, and there may be a limited number of other liquidity providers in the marketplace. There is no assurance that Fund shares will trade at any volume, or at all, on any stock exchange. Low trading activity may result in shares trading at a material discount to NAV.
Because the Fund invests in Underlying ETFs an investor will indirectly bear the principal risks of the Underlying ETFs, including but not limited to, risks associated with investments in ETFs, equity securities, growth stocks, large and small capitalization companies, non-diversification, fixed income investments, derivatives and leverage. The prices of fixed income securities may be affected by changes in interest rates, the creditworthiness and financial strength of the issuer and other factors. An increase in prevailing interest rates typically causes the value of existing fixed income securities to fall and often has a greater impact on longer duration and/or higher quality fixed income securities. The Fund will bear its share of the fees and expenses of the underlying funds. Shareholders will pay higher expenses than would be the case if making direct investments in the underlying funds.
Because the Fund expects to change its exposure as frequently as each week based on short-term price performance information, (i) the Fund’s exposure may be affected by significant market movements at or near the end of such short-term periods that are not predictive of such asset’s performance for subsequent periods and (ii) changes to the Fund’s exposure may lag a significant change in an asset’s direction (up or down) if such changes first take effect at or near a weekend. Such lags between an asset’s performance and changes to the Fund’s exposure may result in significant underperformance relative to t
United States
