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TGF: report for Q4 2023

You may know we launched our Tralucent Global Equity Fund (“the Fund”) on March 31, 2020.
Please find the updated results as at December 31, 2023

Mar 31, 2020 – Dec 31, 2020202120222023Total
Return from shorts-0.07%1.90%7.95%1.47%11.47%
Return from long40.73%30.53%-17.03%24.50%89.75%
Total return of Tralucent Global Equity Fund (Class A)38.18%30.05%-10.84%23.85%98.16%
Indices and popular ETFs
MSCI ACWI32.67%18.04%-12.79%19.33%62.99%
VSP: Vanguard S&P 500 ETF44.56%27.89%-19.25%24.89%86.18%
XIU: iShares S&P/TSX 60 ETF29.34%28.05%-6.36%11.29%73.19%

The above performance of the Fund is not a discrete event. It is a continuation of our solid performance that has gone on for years.

Here is our composite performance from inception in September 2008:

Tralucent Composite to Dec 31, 2023 after ALL Fees
Last one year24.58%
Last three years12.81%
Last five years14.72%
Last ten years13.02%
Since Inception Sept 30, 200812.66%
$100,000 since Sept 2008 has grown to:$598,017

Critique on Current Period

The Tralucent Global Alternative (Long/Short) Equity Fund (“the Fund”) has continued to enjoy solid performance over the past quarter and year. The Class A units of the fund saw a 6.86% return over the past quarter, and a 23.85% return over the past year. Comparatively, the global market benchmark returned 8.62%, and 19.33%, respectively. This quarter, while our fund did not return more than the global benchmark, it did still beat the benchmark over the past year.

We attribute our outperformance to both our stock picks on the long side and on the short side. Of note, it is worth highlighting that the Fund has generated a 11.47% return from our shorting activities to date. Explicitly put – if you had $100,000, you would have realized $11,474 in gains from shorting alone.

Our biggest news of the quarter is that we finally launched our ETF on the TSX! It launched as anticipated on November 16th, 2023. It trades on the TSX under the ticker symbol TGAF. Tell your family and friends! The Fund is now available to be purchased by anyone, not just our direct clients. This has the end effect of allowing us to continue to grow as a fund and company, and allow us more time and flexibility to focus on the fund and fund holdings themselves. Tralucent staff was also lucky enough to be able to ring the TSX closing bell on December 5th, 2023. We have pictures and videos of this once in a lifetime opportunity if anyone is interested in seeing them.

The fourth quarter of 2023 saw the stock market reach a low in October, before it rocketed upwards in November and December. The market closed out the year trading at levels last seen in December 2021. Interestingly, the S&P 500 registered 9 weeks in a row of positive gains to close out the year – this hasn’t happened since 2004. Now, this shouldn’t be cause for concern of a market downturn in 2024 – 80% of the years following an annual market gain of 20% have seen the market continue to rise in the new year. The reason for this market rally is new expectations that not only will the Fed halt raising rates any further, but that the Fed will actually reduce interest rate levels during 2024. As a reminder, by the end of third quarter of 2023, the Fed had increased interest rates to their highest levels in 22 years. We, as all our fund holders, have certainly enjoyed this market rally and Tralucent will continue to monitor and adjust the short and long positions as required in 2024.

Fundata provided us with 3-year information as of June 30, 2023 and rankings for the Fund against others in Canada and we have ranked spectacularly! The details are as follows:

3 YEAR BASISPerformance RankSharpe RatioSharpe RankStandard Deviation
TGF110 (Class A)13/1001.061812/10013.94%
TGF120 (Class M)11/1001.088911/10013.95%

The fourth quarter of 2023 was an eventful one for us, which seems to be the norm lately. Overall, 2023 has been a very exciting year, and we are very excited to see what the next year has in store for Tralucent, for the Fund, and for all our money buddies!

Outlook

Although the prices of equity investments have risen handsomely in the last ten years, the earnings yield of the equity markets have shown to be vastly superior to the prevailing yields in the fixed income markets. This is especially true given the current climate of the bond markets in the face of the Fed raising interest rates. We expect the equity markets to yield 7%-10% per annum over the next ten to thirty years. This is vastly superior to the approximate 4% yield available on long term Treasury Bonds. We remind investors that over time, the equity markets significantly outperform other asset classes. Looking ahead to the next ten years, we have little reason to believe otherwise.

As is our firm belief that equity markets are highly unpredictable over the short-term, we decline to provide any short-term outlook.

We would urge investors to remember that equity markets are not black boxes. Instead, they represent businesses run by millions of human beings that are continuously striving to be better and provide positive returns to their shareholders. It is this human aspiration to succeed which results in higher earnings of the underlying businesses and stock prices.

Tralucent and you:

We would love to have you involved as our money buddy and or supporter. Please let us know if we can elaborate. We would love to chat more with you about money.

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