Ensemble Fund Investor Letter – Second Quarter 2021
|2Q21||1 Year||3 Year||5 Year||Since
*Inception Date: November 2, 2015
Performance data represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Performance data current to the most recent month end are available on our website at www.EnsembleFund.com.
Fund Fees: No loads; 1% gross expense ratio.
The second quarter of 2021 saw an explosion of growth in the United States as our country successfully gave at least one COVID vaccination shot to an incredible 88% of adults over age 65, those most vulnerable to the worst COVID outcomes, and provided the same to two thirds of all adults. 95% of people who were employed pre-COVID are now back to work. Importantly, US household checking and savings accounts contain over $4 trillion more than they did pre-pandemic due to huge stimulus payments and household saving rates running at record high levels during COVID. Consumer spending is now running at all time high levels. In fact, consumer spending, which makes up 70% of the US economy, is likely higher today than it would have been if COVID had never happened.
But while the US economy avoided the worst case recessionary or even depressionary scenarios that we were all rationally worried about a year ago, the full economic impact of COVID is still yet to be seen.
During earlier phases of the pandemic, policy actions by Congress and the Federal Reserve were designed to build a “bridge” that would keep households and businesses economically whole during the period they were limited or unable to conduct business and go to work. Unlike a more typical recession, which is triggered after years of over investment and/or overspending that requires a reset to return to a more sustainable level of activity, COVID hit at a time when economic activity was still running below full capacity.
Therefore, unlike the painful but necessary, and ultimately positive, retrenching that businesses and households go through during a typical recession, Congress and the Federal Reserve rightly recognized that American businesses and households were in relatively healthy economic shape going into COVID and that it was within the collective best interest of the US economy and society to build this “bridge” to the other side. Their hope was that providing this support would allow the economy to return quickly to pre-pandemic levels and begin growing again. And that’s exactly what has played out.
Regardless of our, or any other investor’s, point of view on whether policy makers should have done what they did, it is objectively true that they accomplished their goals. The US economy returned to pre-COVID levels of activity less than 12 months after the pandemic began and is currently growing at an unprecedented rate.
The greatly feared COVID depression was avoided.
But the story of COVID’s impact on the economy is far from over. During the decade between the Great Financial Crisis and COVID, US economic growth was abnormally weak. Rather than seeing an average annual growth rate in real GDP of 3% a year as had occurred for the half a century prior to the financial crisis, real GDP grew at 2% a year. This led to a $4.7 trillion reduction in economic activity compared to where our country would have been if we had continued growing at the old 3% trend.
Investors should consider the investment objectives, risks, and charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. You may obtain a prospectus at www.EnsembleFund.com or by calling the transfer agent at 1-800-785-8165. The prospectus should be read carefully before investing.
Important Risk Information
An investment in the Fund is subject to investment risks, including the possible loss of the principal amount invested. There can be no assurance that the Fund will be successful in meeting its objectives. The Fund invests in common stocks which subjects investors to market risk. The Fund invests in small and mid-cap companies, which involve additional risks such as limited liquidity and greater volatility. The Fund invests in undervalued securities. Undervalued securities are, by definition, out of favor with investors, and there is no way to predict when, if ever, the securities may return to favor. The Fund may invest in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. More information about these risks and other risks can be found in the Fund’s prospectus. The Fund is a non-diversified fund and therefore may be subject to greater volatility than a more diversified investment.
Distributed by Rafferty Capital Markets, LLC Garden City, NY 11530.
For more information about positions owned by Ensemble Capital on behalf of clients as well as additional disclosure information related to this post, please CLICK HERE.
While we do not accept public comments on this blog for compliance reasons, we encourage readers to contact us with their thoughts.
Past performance is no guarantee of future results. All investments in securities carry risks, including the risk of losing one’s entire investment. The opinions expressed within this blog post are as of the date of publication and are provided for informational purposes only. Content will not be updated after publication and should not be considered current after the publication date. All opinions are subject to change without notice and due to changes in the market or economic conditions may not necessarily come to pass. Nothing contained herein should be construed as a comprehensive statement of the matters discussed, considered investment, financial, legal, or tax advice, or a recommendation to buy or sell any securities, and no investment decision should be made based solely on any information provided herein. Links to third party content are included for convenience only, we do not endorse, sponsor, or recommend any of the third parties or their websites and do not guarantee the adequacy of information contained within their websites. Please follow the link above for additional disclosure information.