ALL SEASONS FUND: MARCH 2023 – COMMENTARY LETTER
The All Seasons Fund ended the month of March with a return of +4.10%.
Market Review
The Federal Reserve started hiking rates 13 months ago. In March, the stress of these hikes began to reveal cracks in the banking system. Three regional banks closed, and Credit Suisse had a forced takeover. By the end of March, government deposit backstops and a special lending facility for banks renewed confidence in the banking system, at least in the short term.
Equity market volatility, separate from the highly volatile banking sector, was relatively muted compared to volatility in the interest rates complex. For example, the CBOE VIX Index only briefly jumped above its three-month highs. Government backstops may have temporarily quashed contagion fears. However, the MOVE Index, a measure of Treasury rate volatility through options pricing, hit its highest level since the 2008 Financial Crisis.
Stresses in the banking system have created a challenge for a hawkish Federal Reserve. We believe there is a narrow path for the Federal Reserve to balance financial stability and price stability. Further, the uncertainty around the Federal Reserve hikes going forward may lead to another round of equity market volatility.
The All Seasons trading model converted several short-term trades into a profitable month. The model is designed to adapt as risks and markets change. As we enter an uncertain Q1 earnings season, the model will continue to seek out opportunities only when there is a risk versus reward asymmetry.
On a performance note, the All Seasons Fund (symbol: UNAVX) was designated an overall FIVE-STAR (5-Star) Fund in Morningstar’s Equity Market Neutral Category (out of 33 Equity Market Neutral funds) from its inception on October 13th, 2017 to March 31, 2023, based on risk-adjusted return.
Morningstar uses this step to calculate this rating:
1) Morningstar Risk-Adjusted Return: Adjust Morningstar Return for risk to get MRAR. Morningstar Risk is then calculated as the difference between Morningstar Return and Morningstar Risk-Adjusted Return.
Very truly yours,
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 1-800-MUTUALS or visit our website at www.USAMutuals.com. Read the prospectus or summary prospectus carefully before investing.
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. Share prices and investment returns fluctuate and an investor’s shares may be worth more or less than the original cost upon redemption. For performance data as of the most recent month-end please call 1-866-264-8783.
Fund Objective:
The All Seasons Fund seeks capital appreciation and preservation with lower volatility throughout market cycles. The resulting portfolio targets a high correlation to the S&P 500 in bull markets and a lower, or negative, correlation in bear markets.
Standardized performance as of (3/31/2023) Fund Inception (02/01/2002)
| 1 Year | 5 Year | 10 Year | Since Inception | |
| UNAVX | 14.66% | 6.98% | 8.07% | 10.79% |
| S&P 500 Index | -7.73% | 11.19% | 12.24% | 8.44% |
Performance data quoted 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 redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-866-264-8783. Returns over one year are annualized. The Gross and Net expense 3.46% and 2.00%. The advisor has contractually agreed to limit expenses to 1.99% of the average net assets of the Fund through 7/31/2023.
Definitions:
The S&P 500 Index: An unmanaged composite of 500 large capitalization companies. This index is widely used by professional investors as a performance benchmark for large-cap stocks. You cannot invest directly in an index.
VIX: VIX is the ticker symbol and the popular name for the Chicago Board Options Exchange’s CBOE Volatility Index, a popular measure of the stock market’s expectation of volatility based on S&P 500 index options.
CBOE SKEW Index: A measure of the perceived tail risk of the distribution of S&P 500 investment returns over a 30-day horizon.
MOVE Index: A measure of Treasury rate volatility through options pricing.
The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. The Morningstar ratings do not take into account sales loads.
UNAVX received Five-Star ratings for 3-year (33 funds), 5-year (32 funds), and a Five-Star rating for overall (33 funds) periods ending March 31, 2023. All are in Morningstar’s Equity Market Neutral category based on risk-adjusted returns.
The Predecessor Partnership was not registered under the 1940 Act and was not subject to certain investment limitations, diversification requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code of 1986, amended (the “Code”), which, if applicable, may have adversely affected its performance. On a going-forward basis after October 13, 2017, the Fund’s performance will be calculated using the standard formula set forth in rules promulgated by the SEC, which differs in certain respects from the methods used to compute total returns for the Predecessor Partnership. Please refer to the Financial Statements section of the Fund’s SAI to review additional information regarding the Predecessor Partnership.
SYMBOL: UNAVX
