Johnson Enhanced Return Fund

Fact Sheet All Fund Documents

The Johnson Enhanced Return Index Fund combines the benefits of both active management and index investing. We believe that a passive equity approach combined with an actively managed fixed income portfolio can consistently outperform the market over time with less volatility. The investment objective is to outperform the fund's benchmark, the S&P 500 Index, over a full market cycle. The fund’s passive exposure to S&P 500 futures seeks to provide returns that are highly correlated to the S&P 500 Index, while the actively managed bond portfolio may provide the benefit of additional returns.

Strategy Overview

The Johnson Enhanced Return Fund believes our disciplined process is designed to target equity-index-like price volatility while seeking to exceed the total return of the index over a full market cycle. The strategy's objective is to seek consistent excess returns versus the S&P 500 with low tracking error.

Investment Philosophy

Our process combines a passive equity approach with an actively managed fixed income portfolio. Futures contracts are used to track equity index returns, less an implied cost-of-carry. The short duration bond portfolio aims to outperform the cost-of-carry over time, providing the opportunity for positive excess returns over the S&P 500 Index.

Portfolio Overview

We attempt to replicate the S&P 500 Index using futures contracts. Cash not held on margin is invested in an actively managed bond portfolio with the goal of outperforming the cost-of-carry, generating alpha for the combined portfolio.

Investment Guidelines

  • Benchmark: S&P 500
  • Passive equity exposure to the S&P 500 Index, paired with an actively managed bond portfolio
  • Goal to replicate the S&P500 Index using futures
  • Cash not held on margin is invested in high-quality short duration bonds
  • Futures contracts track equity index returns less an implied cost-of-carry
  • Short-duration bond portfolio aims to outperform the implied cost-of-carry, providing an opportunity for positive excess return versus the Index, with the goal of maintaining low tracking error.
David Theobald
Meet the Portfolio Manager

David Q. Theobald, CFA

David joined Johnson Investment Counsel in 2013. He is a Fixed Income Senior Portfolio Manager and shareholder of the firm. David holds the Chartered Financial Analyst® (CFA®) designation. Prior to joining the firm, he worked at Fort Washington Investment Advisors and Cincinnati Financial Corporation.

Read Bio

Fixed Income

We implement our proprietary Quality Yield investment approach across our suite of duration mandates with the objective of outperforming the market while maintaining a focus on downside risk management and comparable volatility.

Equity

Johnson Asset Management offers both enhanced return index capabilities and active equity solutions. We implement a repeatable and disciplined process that seeks to optimize return per unit of risk.

Mutual Funds

Johnson Asset Management’s Fixed Income and Equity solutions are accessible through our competitively priced mutual funds, which we have been providing institutional clients since 2000.

Disclaimer:

Investors should consider the investment objectives, risks, charges, and expenses of the Fund(s) before investing. The prospectus contains this and other information about the Fund(s) and should be read carefully before investing. The prospectus may be obtained at www.johnsonmutualfunds.com, or by calling, 800-541-0170, or 513-661-3100. Distributed by Ultimus Fund Distributors, LLC, Member FINRA/SIPC. Johnson Asset Management and Johnson Investment Counsel, Inc, are not affiliated with Ultimus Fund Distributors, LLC.

Investing involves risk, including the possible loss of principal. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.

Diversification does not ensure a profit or guarantee against loss.

Please refer to the prospectus for each fund's specific risks.

Shares in the Fund may fluctuate, sometimes significantly, based on interest rates, market conditions, credit quality and other factors. In a rising interest rate environment, the value of an income fund is likely to fall. Generally, bond values will decline as interest rates rise. The market’s behavior is unpredictable and there can be no guarantee that the Fund will achieve its goal. The Fund’s performance could be affected if borrowers pay back principal on certain debt securities before or after the market anticipates such payments, shortening or lengthening their duration, and could magnify the effect of the rate increase on such security’s price. To the extent the Fund invests more heavily in particular bond market sectors, its performance will be especially sensitive to developments that significantly affect those sectors. When issued/delayed-delivery securities can have a leverage-like effect on the Fund, which may increase fluctuations in the Fund’s share price and may cause the Fund to liquidate positions when it may not be advantageous to do so to satisfy its purchase obligations. Fixed income investments are affected by a number of risks, including fluctuation in interest rates, credit risk, and prepayment risk. In general, as prevailing interest rates rise, fixed income prices will fall. The Fund may be slightly under-invested or slightly over-invested compared to the underlying S&P 500 equity index, which could cause the Fund to be slightly less or more volatile than the underlying index, and the Fund’s returns from the futures contracts may not mirror the underlying index.

Definitions:

S&P 500 Index: An index of 500 leading U.S. public companies that is commonly used to represent the performance of the large-cap U.S. stock market.

Bloomberg US Intermediate Government/Credit Index: An index of investment-grade U.S. government and corporate bonds with intermediate-term maturities

Bloomberg US Aggregate Bond Index: A broad-based benchmark that measures the performance of the U.S. investment-grade taxable bond market, including government, corporate, mortgage-backed, and asset-backed securities.

ICE BofA US Govt & Corp 1-3 Yr Index: An index that measures the performance of U.S. dollar-denominated investment-grade government and corporate bonds with remaining maturities between one and three years.

Russell 2500 Index: A market capitalization-weighted index that measures the performance of small- and mid-cap U.S. companies, representing approximately the 2,500 smallest companies in the Russell 3000 Index.