ALL SEASONS FUND: AUGUST 2024 – COMMENTARY LETTER
The All Seasons Fund ended the month of August with a return of +2.32%.
Market Review
August began with sharp declines in broad-based equity indices. Concerns about economic growth drove the sell-off after a worse-than-expected jobs report. There were also concerns about the so-called “Japan carry trade” unwinding after the Bank of Japan raised its benchmark interest rates.
Despite the initial downturn, equity markets recovered with the expectation of lower interest rates, which provided a tailwind. The probability of a soft economic landing increased, and Federal Reserve Chairman Powell confirmed a shift in focus to defense against a slumping labor market.
Ninety-nine percent of S&P 500 companies have reported Q2 2024 earnings, and the results were mixed, according to analysts. Technology and Financials led the way with higher-than-expected growth. Only Materials and Industrials posted negative earnings-per-share growth, indicating no change in growth stocks or the outperformance of value stocks.
Markets in September have stalled with key economic reports still upcoming, and the Federal Reserve meets on September 18th. The market expects a 25bps rate cut, although the possibility of a 50bps rate cut remains on the table depending on incoming jobs data.
As markets move closer to the historically volatile presidential election cycle, options prices suggest slightly higher volatility through the November election. We believe markets also have a new known risk in unwinding the “Japan carry trade,” which sent the volatility index (VIX) to levels last seen during the Covid March sell-off. The All Seasons fund typically has more actionable trading opportunities in higher-volatility environments.
On September 1, 2024, the All Seasons Fund (UNAVX) received a 4-Star Overall Morningstar Rating™ from its inception on October 13th, 2017 to August 31, 2024, out of 228 funds, in the Tactical Allocation Category, based on risk-adjusted returns. The fund seeks capital appreciation and capital preservation with lower volatility throughout market cycles. It is highly correlated with equities in bull markets and less or negatively correlated in bear markets.
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.
Sincerely 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.
Fund Objective:
The Fund seeks capital appreciation and capital preservation with lower volatility throughout market cycles – highly correlated with the Standard & Poor’s (“S&P”) 500® Index in bull markets, and less or negatively correlated in bear markets.
Standardized performance as of (6/30/2024) Fund Inception (2/01/2002)
| 1 Year | 3 Year | 5 Year | 10 Year | Since Inception | |
| UNAVX | 4.99% | 9.49% | 5.24% | 6.43% | 10.32% |
| S&P 500 Index | 24.56% | 10.01% | 15.05% | 12.86% | 9.42% |
| S&P 500 Target Risk Conservative Index (TR) | 7.96% | 0.03% | 3.42% | 3.68% | 4.78% |
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 expenses are 2.65% and 2.04%.
The Fund’s adviser, USA Mutuals Advisors, Inc. (the “Adviser”), has contractually agreed to reduce its fees and/or absorb expenses of the Fund, at least until July 31, 2025, to ensure that total annual fund operating expenses after fee waiver and reimbursement (but does not include: front-end or contingent deferred loads, shareholder servicing plan fees, taxes, borrowing costs such as interest and dividends on short positions, brokerage fees and commissions, acquired fund fees and expenses, extraordinary expenses such as litigation expenses (which may include indemnification of Fund officers and Trustees, contractual indemnification of Fund service providers (other than the Adviser)) and class-specific expenses like distribution (12b-1) fees) will not exceed 2.04% of the Fund’s average daily net assets for each share class.”
Definitions:
Bull: A bull is an investor who thinks the market, a specific security, or an industry is poised to rise. Investors who adopt a bull approach purchase securities under the assumption that they can sell them later at a higher price.
The S&P 500 Index: An unmanaged composite of 500 large capitalization companies. Professional investors widely use this index as a performance benchmark for large-cap stocks. You cannot invest directly in an index.
Volatility – The degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns.
Carry Trade: An investment strategy that involves borrowing money at a low interest rate and investing it in assets with a higher interest rate. The goal is to profit from the difference in interest rates between the two currencies.
Performance data quoted prior to October 13, 2017 represents the past performance of the Goldman Navigator Fund, L.P., a limited partnership (the “Predecessor Partnership”). From its inception on February 1, 2002 through October 13, 2017, the Predecessor Partnership maintained investment policies, objectives, guidelines, and restrictions that were, in all material respects, equivalent to those of the Fund. 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, as 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. The Navigator Fund name was changed to the All Seasons Fund on July 21st, 2021. Past performance is no guarantee of future results.
UNAVX also received 5-Star Morningstar Ratings™ for 3-year out of 228 funds, and 3-Star for 5-year out of 208 funds, for the period ending August 31, 2024. All in Morningstar’s Tactial Allocation category, based on risk-adjusted returns. The 10-year returns are not included in the Morningstar rating because the Predecessor Partnership was not registered under the 1940 Act.
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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 Morningstar Rating does not include any adjustment for sales loads. 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.
SYMBOL: UNAVX
