2020-Q4 Market Summary*:
Efficient U.S. vaccination distribution, $1.9 trillion in fiscal stimulus, and a proposed $2 trillion infrastructure bill are expected to result in a U.S. economic boom. The enthusiasm surrounding the U.S. economic reopening helped prompt stronger performance from the U.S. relative to international equity markets. Despite the value-rotation detracting from performance, the S&P 500 Index had a reasonably good start to the year, rising 6.0% during Q1. Developed markets (MSCI World ex U.S. Net TR USD Index) had a total return of 4.0% while emerging markets (MSCI Emerging Markets net TR USD Index) lagged with a return of only 2.3%. While equity markets started the year in positive territory, fixed income faced major headwinds due to higher Treasury yields. The Bloomberg Barclays U.S. Aggregate Bond Index returned -3.4% for the quarter.
In the first quarter of 2021, Derivatix fund gained 6.4% in net profit after all fees compared to the S&P 500 growth of 6.0%. In the long run since its inception, Derivatix fund has made more than 166% net profit for its initial investors which means a 19.2% average annual return meanwhile. In the same period, the S&P 500 has grown 100.6% with an average return of 13.3% annually.
Due to the existing healthy volatility in the 2021 market, we expect exceptional growth in the fund for the current year. While the US market keeps going strong and makes new highs, it is essential to have protections in place for any possible sizable correction in the future. Better to be safe than sorry!
*: Source: Global X ETF