$JOJO: When the Risk-Off Regime Returns
Description
Market sentiment can flip overnight—from euphoria to fear. History shows how quickly investors rush from high-yield bonds and equities into U.S. Treasuries when volatility spikes, as seen in 2018, 2020, and during major corrections in risk-on assets. The challenge is not predicting these moments but preparing for them.
The ATAC Credit Rotation ETF (JOJO), which I launched in 2021, is designed for precisely that. The fund dynamically rotates between high-yield corporate bonds in risk-on periods and long-duration Treasuries when markets turn defensive². Its model relies on a key early warning indicator: the relative performance of utility stocks versus the broader market³. Utilities—stable, dividend-paying, and defensive—often outperform before volatility rises, signaling investors’ retreat from risk⁴. When utilities lead, both equity volatility and credit spreads tend to widen shortly after³.
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/.
When JOJO’s model detects this shift, it reallocates from high-yield bonds into Treasuries, typically on a weekly rebalance⁵. The goal is not to predict crashes but to sidestep them. Treasuries have historically rallied when fear rises, offering potential outperformance while junk bonds fall⁶. Once spreads stabilize and confidence returns, JOJO rotates back into credit exposure, ideally buying at distressed levels⁷.
A typical trigger for such a “risk-off” move is a recession signal. As growth slows, credit spreads widen and investors demand higher compensation for holding risky debt⁸. During downturns, Treasury prices often rise as investors flee to quality, while lower-grade debt suffers default risk⁹. In those phases, JOJO’s rotation aims to preserve capital by staying in Treasuries and re-entering credit once conditions normalize⁷.
The same mechanism applies to stagflation—the toxic mix of high inflation and weak growth. Defensive sectors such as utilities tend to outperform as investors brace for slower expansion⁴. JOJO’s signal would again interpret that defensiveness as a cue to shift toward Treasuries. Although inflation pressures can hurt long-duration bonds, fear and demand for safety often still drive Treasury rallies in the early stages of a shock¹⁰. In these environments, Treasuries may “lose less” than corporate debt, which can face both margin pressure and rising defaults.
The strategy also provides real-time insight into market tone. When JOJO flips into Treasuries, it effectively raises a caution flag for investors. Because its process is systematic and unemotional, it reacts to the data rather than sentiment. Even if it occasionally rotates early or late, the discipline matters: investors gain a structured way to de-risk when the signals flash red.
No strategy eliminates risk. Treasuries carry duration exposure, and false signals can occur. Still, JOJO’s design offers a tactical framework for navigating shifting regimes—defense in downturns, offense in recoveries. For investors seeking an adaptive fixed-income sleeve that reacts to changing conditions rather than forecasts them, JOJO represents a thoughtful approach to balancing fear and opportunity.
¹ Kensington Asset Management, Flight to Quality in Uncertain Times, 2025.
² ATAC Funds, “JOJO – ATAC Credit Rotation ETF,” 2025.
³ Michael Gayed, “JOJO: It’s Time for a Reckoning in Junk Debt,” The Lead-Lag Report, 2025.
⁴ Gabelli Funds Research, “Utilities – U.S. Powering the Future Capital Investment Super-Cycle,” 2024.
⁵ ATAC Funds, “JOJO – ATAC Credit Rotation ETF.”
⁶ See It Market, “Long Treasury Bonds Indicator Says Risk-Off, But With a Twist,” 2024.
⁷ Gayed, “JOJO: It’s Time for a Reckoning in Junk Debt.”
⁸ Current Market Valuation, “Junk Bond Spreads,” 2025.
⁹ LongtermTrends, “U.S. Treasury Yield Curve,” 2025.
¹⁰ Investment Executive, “Oil Price Shock Could Impact Global Growth, Inflation: Fitch,” 2025.
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 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 t
United States
