First Quarter 2021

The U.S. Government Securities Ultra-Short Bond Fund had a total return of 0.00 percent in the first quarter of 2021, underperforming its benchmark, the Bloomberg Barclays US Treasury Bills 6-9 Months Index, which returned 0.05 percent. See complete fund performance here.

The main source of underperformance came from allocations to bonds with maturities between one and three years, as they underperformed the benchmark.

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. Performance data quoted represents past performance.

Outlook

The yield on the 10-year Treasury, a bellwether used in the fixed-income markets, ended the quarter at 1.74%, a substantial increase from 0.91% at the end of 2020, and the highest yield since before the pandemic began. The Treasury yield curve has “steepened” markedly so far this year as short-term yields have fallen slightly while longer-term yields have risen significantly. The expectation of increasing inflation due to an accelerating economic recovery, a sizeable increase in Treasury issuance following trillions in emergency fiscal measures and seemingly open-ended stimulus spending out of Washington contributed to yields moving up strongly during the quarter. Following its most recent meeting in March, the Federal Open Markets Committee (FOMC) once again left interest rates unchanged and signaled that it would continue emergency asset purchases ($80 billion in Treasuries and $40 billion in mortgage-backed bonds per month) until the economy reaches full employment and inflation rises above 2%. In the Fed’s statement, the central bank acknowledged that “indicators of economic and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak.” Additionally, the FOMC updated predictions for gross domestic product (GDP), inflation and unemployment. Interestingly, the Fed’s median estimate for the core Personal Consumption Expenditures (PCE) Index, the central bank’s preferred inflation measure, is expected to be 2.2% this year – exceeding its stated goal. The Fed has signaled it will allow inflation numbers to run well above its 2% target for a certain period of time, which is a marked change from its historic role of preemptively raising short-term rates to quell inflationary pressures in the economy. The median estimate for GDP in 2021 rose to 6.5% from 4.2% at the December meeting. The unemployment rate is expected to be 4.5% in 2021 from 6.2% currently.

 

The Barclays U.S. Treasury Bills 6-9 Months Total Return Index tracks the performance of U.S. Treasury Bills with a maturity of six to nine months. Gross domestic product is the total value of goods produced and services provided in a country during one year. The personal consumption expenditures index reflects changes in the prices of goods and services purchased by consumers in the U.S.

Net Asset Value
as of 04/20/2021

Global Resources Fund PSPFX $6.49 -0.14 Gold and Precious Metals Fund USERX $13.19 0.02 World Precious Minerals Fund UNWPX $5.09 -0.01 China Region Fund USCOX $9.90 -0.07 Emerging Europe Fund EUROX $6.23 -0.05 All American Equity Fund GBTFX $24.65 No Change Global Luxury Goods Fund USLUX $22.40 -0.30 Near-Term Tax Free Fund NEARX $2.25 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change