Ubique | September 2020 Update
Last month, we mentioned that there were some final changes we were making to the fund, which we were hoping to get done before November. Thankfully, these have all now been implemented ahead of schedule and Ubique is now running at 100%.
In essence, the changes were to two of the three strategies, with the Golden Ratio strategy largely unaffected. What it means to the other two strategies is that we rebalance/change position only twice a year now, or unless a stop loss is reached. This helps cut out a lot of noise, slippage, and brokerage fees, helps increase our compounded annual growth rate to over 23% and keeps our maximum drawdown to just -16%. This does mean a different approach to the Seasonal Sector Rotational strategy, which now produces a smoother equity curve which in turn has an impact on the fund as a whole. Instead of looking at a monthly cycle, it now looks at a bi-annual cycle.
For more in-depth information, I strongly recommend listening to episode 14 of the podcast as we spend almost an hour going through the nuances of these changes.
Looking back on September, we saw gold continue to retrace its steps from the large bull run it has been on over the last year or so. As such, it actually triggered a stop loss in that position, which forced that part of the fund to go to cash. A stop loss is never something you want to see, however, due to the volatility displayed in this strategy there is a higher tendency to see stop losses being hit here. On the other side of that coin, that volatility allows us to capture the upside to its maximum potential, and this is why we have seen a 50% plus rally in this position for us over the last 12 months. Bottom line, you can't keep all the profits you make, some times you have to give a little back to the market. Longer term, there is no way to tell if this is just a correction and a consolidation before a continued bull run, or if this is the end of it. We aren't going to guess, but instead, follow our arithmetic approach, and when the time comes to switch to indices, we will.
The other two strategies almost levelled each other out leaving us down 1.93% on the month in total, and 8.43% up on the year as a whole.
As we go into October, we enter what is traditionally a very volatile month, as it the precursor to the US elections. Regardless of your political persuasions, this year's will be an absolute doosie, and predicting the outcome and the market reaction is anyone's guess!
As the fund as a whole would rebalance at the beginning of November as per the new model, and with the election happening at the beginning of November, we have taken the unusual decision to remain in cash until after the election. The reasoning is to keep the volatility in check during the lead up and the election night itself. So at the end of October when we are scheduled to go to cash until the first trading day of November, we are going to wait until the Monday (9th) after the election (3rd) to enter our new positions. This is simply to protect against the potential volatility which this election offers, nothing more. Regardless of who wins, we will enter our positions as normal the following Monday.
As the final changes have now been made, we have also locked in the remuneration fee structure, which is geared to put the investor first and the fund manager second. This is now all available to view on our website, or you can download the new prospectus from the Ubique page on the website. Please note, the website will be updated monthly, whereas the prospectus will be updated every six months inline with the funds rebalancing.
We will soon be opening the fund to a limited round of fund raising, which we will be capped. If this is of interest and you would like to find out more, please get in touch.
For more in depth analysis, everything is on the website for inspection (www.willowoakadvisory.com).
Until next time, stay safe and swing easy.