Ensemble Fund
Annual Letter
October 31, 2022
The Ensemble Fund (the “Fund”) returned -29.33% for the fiscal year ended October 31, 2022. For comparative purposes, the S&P 500® Index, which is the Fund’s benchmark, had a total return of -14.61% over the same time period.
The Fund underperformed the S&P 500® Index very sharply from the beginning of the fiscal year through mid-May. The Fund then outperformed the market through the end of the fiscal year as many of the holdings that most dramatically underperformed earlier in the year, such as Netflix, Illumina, and our housing related investments, reversed their relative performance.
During the fiscal year, we owned 28 different companies of which all but two (Costco and Old Dominion, which we sold out of early in the year) generated negative returns.
Significant detractors from the Fund’s total return included the following:
Significant contributors to the Fund’s total return included the following:
The strong economic expansion experienced during 2021 gave way to heighted inflation and a sudden stop to real economic growth in 2022. With the Fed suddenly forced to rapidly increase interest rates to ward off inflation, even if doing so may throw the US and global economy into a recession, financial markets became gripped by a panic over fears of stagflationary forces similar to those seen in the 1970s taking hold. While we acknowledge that such fears have merit, we also believe that the pandemic fueled inflation of today is due to very different reasons than what was experienced in the 1970s. We believe that the depth of the selloff in many of the stocks in our portfolio is excessive, causing these stocks to now trade at levels that offer unusually attractive risk adjusted return potential.
You can read more about our views on the economy and markets, as well find in depth pro- files of our portfolio holdings, in our quarterly letters posted to www.EnsembleFund.com/news/investor-communications, as well as by following the Intrinsic Investing blog, published by Ensemble Capital Management, the Advisor to the Fund, at www.IntrinsicInvesting.com.
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 by calling 1-800-785-8165.
The Ensemble Fund’s prospectus contains important information about the Fund’s investment objectives, potential risks, management fees, charges and expenses, and other information and should be read and considered carefully before investing. You may obtain a current copy of the Fund’s prospectus by calling 1-800-785-8165. Distributed by Arbor Court Capital, LLC.
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 on this website 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 Arbor Court Capital, LLC member FINRA/SIPC.