First Quarter 2018

The Holmes Macro Trends Fund had a total return of 0.41 percent in the first quarter of 2018, outperforming its benchmark, the S&P Composite 1500 Index, which returned negative 0.76 percent. See complete fund performance here. See complete fund performance.

Past performance does not guarantee future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost.

Strengths

  • The largest contributors to the fund were its allocations to consumer staples, financials and industrials.
  • The fund’s overweight in sector-specific investments proved to be a good decision, evidenced by the allocation’s outperformance.
  • Investments in Medifast, Ciena and Phibro Animal Health were among the best contributors to fund performance.

Weaknesses

  • The fund’s allocations to materials, information technology and energy were the largest drags on the fund’s performance.
  • The underweight allocations to energy and financials were the principal driver of underperformance.
  • Investments in PentaNova Energy, MiMedx and NIC were the fund’s worst contributors to performance.

Opportunities

  • While U.S. stocks are now in an "accelerating phase," billionaire investor Jeffrey Gundlach is predicting that the S&P 500 Index will post a negative rate of return in 2018. The S&P 500 "may go up 15 percent in the first part of the year, but I believe, when it falls, it will wipe out the entire gain of the first part of the year with a negative sign in front of it," Gundlach said. His bearishness on the S&P, and other risk assets including U.S. corporate bonds, stems from the notion that the Federal Reserve has begun its era of "quantitative tightening."
  • The Labor Department said its consumer price index (CPI), excluding the volatile food and energy components, rose 0.3 percent in March as prices for new and used cars and trucks, as well as motor vehicle insurance, increased. That was the biggest advance in core CPI since January 2017 and followed a 0.1 percent gain in November. The core CPI increased 1.8 percent in the 12 months through December, picking up from 1.7 percent in November.
  • Small-business confidence hit a record high in 2017, according to the National Federation of Independent Business (NFIB). The index came in at 104.9 in December. The NFIB says the index's average monthly level last year was 104.8, the highest in the history of its survey.

Threats

  • The spread between the two-year Treasury yield and 10-year Treasury yield is at multi-year lows. If the Federal Reserve continues to tighten rates and the 10-year yield stays at current levels, the spread will be close to inverting, thus slowing the flow of money and possibly hindering future growth.
  • Charles Schwab’s client account cash balances as a percentage of total assets are at record low levels, below the lows prior to the tech crash in 2000. This, combined with the longest bull market in history, nine years running, is seemingly starting to worry some market participants.
  • A growing number of economists expect the Fed to step up the pace of its interest-rate increases this year to four hikes, from the current projections of three, according to a Bloomberg survey of 29 respondents conducted February 12-14. That brought the survey’s median estimate for the upper bound of the central bank’s federal funds rate target to 2.5 percent by year-end versus the current 1.5 percent. A faster pace of rate hikes would put increased pressure on bonds and could deter economic activity.

The S&P 1500 Composite Index is a broad-based capitalization-weighted index of 1500 U.S. companies and is comprised of the S&P 400, S&P 500, and the S&P 600. The index was developed with a base value of 100 as of December 30, 1994. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.

The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns.

The National Federation of Independent Business (NFIB)Small Business Optimism Index is a composite of ten seasonally adjusted components. It provides an indication of the health of small businesses in the U.S., which account of roughly 50% of the nation's private workforce.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Holmes Macro Trends Fund as a percentage of net assets as of 3/31/2018: Medifast Inc. 4.03%, Ciena Corp. 2.77%, Phibro Animal Health Corp. 3.21%, PentaNova Energy Corp. 0.39%, MiMedx Group Inc. 1.78%, NIC Inc. 2.23%.

Standard Disclosure

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Stock markets can be volatile and share prices can fluctuate in response to sector-related and other risks as described in the fund prospectus.

 

Net Asset Value
as of 09/18/2018

Global Resources Fund PSPFX $5.37 0.05 Gold and Precious Metals Fund USERX $6.57 No Change World Precious Minerals Fund UNWPX $3.49 0.06 China Region Fund USCOX $9.02 0.15 Emerging Europe Fund EUROX $6.36 0.09 All American Equity Fund GBTFX $26.52 0.12 Holmes Macro Trends Fund MEGAX $20.20 0.08 Near-Term Tax Free Fund NEARX $2.19 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change