VITIUM GLOBAL FUND: DECEMBER 2020 – COMMENTARY LETTER
For the month of December, VICEX gained 4.54%, compared to a 4.51% return for the MSCI World Index. The S&P 500 index rose 3.8% during the month.
Market Review
December saw a continuation of the rally that began in late October, spurred by the rollout of multiple COVID-19 vaccines and the signing of a new fiscal relief bill. Small cap stocks enjoyed a second month of outperformance, while growth stocks outlasted value-oriented names. Interest rates rose slightly, and the U.S. dollar continued its slide against the other major currencies.
Looking back on the last twelve months, 2020 was certainly one of the most challenging periods in modern history. Australian bushfires welcomed the new year, destroying an area larger than the size of Cuba. California’s wildfire season was the worst on record, oil traded below zero for the first time ever, and racial divisiveness erupted across the country on an unprecedented scale. And not to forget, a global pandemic killed nearly 2 million people and caused financial destruction on a scale not seen since the 1920s.
But difficulties are often followed by periods of opportunity. The markets are forward-looking and seem more focused on the end of the COVID-19 epidemic, although the popular press seems to discount the considerable strides made on both the medical and economic front since March. We continue to believe that the world will exit the pandemic recession quicker and more powerfully than is believed by the general public.
The portfolio team is focused on repositioning the Vitium Fund in an attempt to profit from the significant opportunities we see heading into 2021. We believe that the next twelve months will be dominated by two broad economic themes:
• Reflation. Policy makers seem intent on running the economy at a red-hot pace, with the goal of returning the economy to pre-COVID levels as quickly as possible. While unemployment cost U.S. households $330 billion in lost wage income, they have already received over three times that amount from fiscal stimulus, with much more likely to come. With the Democrats in control of both the House and the Senate, Biden aims to spend trillions of additional dollars for infrastructure and economic relief.
• Inflation. In our view, an economic recovery buoyed by pent-up demand and an unprecedented amount of government spending will make it difficult to keep inflation at the Federal Reserve’s 2% target. Pressure on prices is most evident in the explosive rally in bitcoin, which potentially indicates demand for non-dollar denominated assets. With 10-year Treasury yields at nine-month highs, interest rates are likely the biggest risk factor to equity prices.
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 original cost upon redemption. For performance data as of the most recent month-end please call 1-866-264-8783.
We will express these views in multiple ways in the Vitium portfolio. The Fund’s overweight to small, foreign companies in our four areas of concentration will continue. Our focus on opportunities in the gaming space, especially online and in offshore regions like Macau an Singapore, will also guide our activities. A de-emphasis on defense contractors will give us capital to express our view in more opportunistic areas in the consumer discretionary sectors. We will be communicating on a much more regular basis as we steer the Fund’s assets toward the most promising sectors of the market.
Sincerely yours,
Standardized performance as of (12/31/2020) Fund Inception (02/01/2002)
| 1 Year | 5 Year | 10 Year | Since Inception | |
| VICEX | -0.90% | 6.26% | 9.53% | 8.78% |
| MSCI World Index | 16.82 | 12.86 | 9.71 | 9.31 |
Investor Class 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 1.67% and 1.49%. Contractual fee waivers through 07/31/2021.
DEFINITIONS:
The MSCI All Country World Index Total Return (“MSCI ACWI TR”) captures large and mid-cap representation across 23 Developed Markets (DM) and 26 Emerging Markets (EM) countries.
The S&P 500 Total Return Index® (“S&P 500 TR”) is considered to be generally representative of the U.S. large capitalization stock market as a whole. You cannot invest directly in an index.
SYMBOL: VICEX
