The Ensemble Fund has released its investment update for the third quarter of 2023, providing insights into the fund's performance, market conditions, and investment strategy. During the quarter, the fund experienced a decline of 5.96%, underperforming the S&P 500. This decline was primarily driven by significant drops in the value of holdings in Illumina and Masimo, which the fund believes are currently undervalued.
The update also discusses the impact of rising interest rates on equity valuations and the overall economy. The Federal Reserve's more positive economic outlook and expectation of no recession has led to higher interest rates. The fund argues that valuations for mature, profitable businesses in the S&P 500 are not low or declining, but rather consistent with the higher interest rate environment.
In addition, the update provides insights into the semiconductor industry, specifically focusing on Analog Devices. The fund believes that analog chipmakers like Analog Devices have a competitive advantage due to their scale, reputation, and specialized talent resource.
Furthermore, the update highlights the payment industry, specifically Mastercard. The fund emphasizes the competitive moat of Mastercard and Visa in the payment industry, as well as the benefits of card-based payments for consumers and merchants.
Sources: [78ebffdc]