ALL SEASONS FUND: FEBRUARY 2023 – COMMENTARY LETTER
The All Seasons Fund ended the month of February with a return of -0.35%.
Market Review
January’s equity rally was fueled by the perception of a less hawkish Fed. February was a return to expectations that rates will remain higher for longer. Economic data came in hot to start the month with the nonfarm job payrolls and producer price index higher than expected.
Earnings data reported mostly in line with expectations – however, positive, and negative earnings surprises were rewarded and punished with above average moves post earnings. Technology stocks, in particular, benefited from the lowered earnings expectations coming into the month. Technology stocks outperformed most other sectors.
March will have several economic announcements that may move markets. The Federal Open Market Committee decision on March 22nd may offer insights into the rate path in 2023. Although the bond market expects at least another 25bps hike in March, there were some Fed members in favor of a larger 50bps hike in February. Any change to expectations may cause market turmoil with the onset of a fractured Fed.
The volatility index (VIX) rose slightly, but true investor fear remained muted in the options market. Portfolio hedgers were not overpaying for downside protection. We believe markets may be in a holding pattern as the Fed digests more economic data. Most notably, the lesser observed CBOE Skew Index (SKEW) remains on the low end of its range. We believe a low SKEW price may indicate signs of a complacent marketplace. In our experience, complacency is the most dangerous collective emotion in markets.
The All Seasons trading model has remained cautious in 2023 with lower-than-average trade conviction and shorter durations in positions. This is only a reflection of the model’s expectation of risk/reward asymmetry for trading. We take no long-term directional view of markets. We simply trade when short term opportunities may exist.
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.
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 (12/31/2022) Fund Inception (02/01/2002)
| 1 Year | 5 Year | 10 Year | Since Inception | |
| UNAVX | 6.91% | 5.50% | 8.38% | 10.65% |
| S&P 500 Index | -18.11% | 9.42% | 12.56% | 8.17% |
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.
SYMBOL: UNAVX
