3rd Quarter 2010 Commentary - ASTON/New Century Absolute Return ETF Fund

3rd Quarter 2010 Commentary

A choppy quarter began with the bottoming of the June downtrend in the broader markets, leading to a month-long uptrend in July. Breadth retraced downward throughout August, however, only to reverse upward in September and break through the July top and close the quarter at its high. During the August decline, the Fund began to raise cash and even hedge the portfolio's gains somewhat before the declining market breadth reversed and began to climb as September arrived. The portfolio then quickly used the cash to get fully invested for the remainder of the quarter.

The leading story is international equity markets taking leadership from US markets. For the first time in its history, the Fund held a 30% position in non-domestic ETFs, ending the quarter with a position still over 27% of assets. Notable among the international leaders was the worldwide iShares MSCI All Country World Index ex-US ETF. The portfolio had a full position in this ETF during most of the period, which provided broad participation in numerous international markets.  The Emerging Markets of Brazil, Turkey, Indonesia, India, and Chile produced the highest returns within international equities. Europe rebounded and the portfolio initiated investment in two broad European ETFs.

Growth indexes outperformed their value counterparts within US markets. In addition, mid- and small-caps showed the strongest returns in the first and last months of the quarter, but were under the most pressure in August. September highlighted the strength of small- and mid-cap growth equities, and consequently the strategy has over-weighted that portion of the style grid. Commodities-oriented ETFs also provided strong returns, notably with the global agricultural ETF PowerShares Global Agriculture Portfolio as well as in gold and coal. 

New Century Capital Management
Hinsdale, Illinois

11 October 2010

As of September 30, 2010, iShares MSCI All Country World Index ex-US comprised 3.15% of the portfolio's assets and PowerShares Global Agriculture Portfolio – 2.04%.

Note: The Fund invests in exchange-traded funds (ETFs) which are securities of other investment companies. An ETF seeks to track the performance of an index by holding all or a sampling of the securities on that index.  An ETF may not be able to replicate an index exactly since returns may be reduced by transaction costs, expenses and other factors while the index has none. The Fund invests in many different areas of the market, each of which may involve its own element of risk. Use of aggressive ETF investment techniques such as futures contracts, options on futures contracts and forward contracts may expose an underlying fund to potentially dramatic changes (losses) in the value of its portfolio. In selling covered call options the Fund continues to bear the risk of a decline in the value of the underlying stock, an illiquid market, and no control over the exercise of the call options. 

Past performance does not guarantee future results. Investment return and principal value of mutual funds will vary with market conditions, so that shares, when redeemed, may be worth more or less than their original cost.

Before investing, carefully consider the fund’s investment objectives, risks, charges and expenses. Contact 800 992-8151 for a prospectus containing this and other information. Read it carefully. Aston Funds are distributed by BNY Mellon Distributors Inc.