Corporate events

Since the beginning of 2020 changes in the investment management remuneration have been agreed between the Element ONE fund and the investment management company. The success fee from 2020 will be 22%, instead of the previously used 25%, but the Hurdle Rate will be removed, which since 2017 has been set at the ICE LIBOR 1 YEAR USD plus 0.15% (about 2.1% for 2019 year).

For the maximum convenience of clients in determining the NAV of the fund the commission for success will be taken into account in the monthly calculation of the fund's share price. This was made possible thanks to the cancellation of the Hurdle Rate - earlier we had to wait for the end of the year to calculate commissions due to the need to take into account the final average annual rate of LIBOR.

These changes will simplify calculations for customers and further enhance transparency. All changes will be reflected in corporate documents and are available on the RAISON ASSET MANAGEMENT website on the fund page until the first NAV fund calculation in 2020.

Element ONE


Issuer: ELEMENT ONE LTD 
ISIN Number: VGG299771086
Issue Description: USD CL B SHS
ISO CFI: CICXXX

The broad market index SP500 met 2020 at its all-time highs. The optimistic mood of investors of the past year was influenced by the stimulating policy of the Fed and the “political games” of Donald Trump.

During 2019 the Fed lowered its key interest rate from 2.5% to 1.75% points and increased short-term liquidity in the repo market. In his statements Fed Chairman Jerome Powell emphasized that the Fed does not plan to raise rates in 2020. With this, it can be assumed that in the event of a deterioration in macroeconomic indicators or an increase in geopolitical tensions, the regulator may reconsider its views even towards lower rates.

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Fig. 1. Fed interest rate

Nowadays the US labor market is feeling confident. Unemployment is at its historic low of 3.5%.

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Fig. 2. Unemployment rate

The increase in jobs in December 2019 amounted to 164 thousand. The numbers are slightly lower than the forecast, however this indicator has not gone into the negative zone since the end of 2010.

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Fig. 3. The number of new jobs in the non-agricultural sector

Annual consumer inflation is at a target level of 2%. Since the beginning of the second half of 2019 business activity indices have turned upward. The current economic situation does not cause "hawkish" concerns among the Fed.

The current optimism of investors reflect the events of December 2019. A strong impulse for market growth was given by a turn in the endless trade wars between the United States and China. This is due to the decision of the political authorities of these countries to sign the “phase 1” in January 2020. The introduction of new tariffs was canceled and existing ones reduced, which indicates a qualitatively new level in the negotiations. An additional plus was the statement of readiness to work on “phase 2”. Of course you need to understand that this problem will not have a quick and easy solution. Trade wars and geopolitical tensions always make markets nervous, so any positive agreements on these issues will move the markets up. And if the positive trend in the negotiations continues it will provide significant support to the markets in 2020.

Of course, the USMCA (Free Trade Agreement between the United States of America, Mexico and Canada) will contribute to economic growth. According to Finance Minister Stephen Mnuchin, this will add + 0.7% to US GDP. Mexico has already ratified the USMCA. The US and Canada are expected to ratify the USMCA in 2020.

In November 2020, the US presidential election will be held. The policy of President Donald Trump is focused on the growth of the stock market - from the ability to achieve better conditions in trade disputes to pressuring on the Fed. Trump's victory could provide additional growth for the US stock market.


Risks:

- Disruption of trade agreements and tariff increases: USA
- China;
- US presidential election;
- the possible brewing of the US trade conflict with France;
- US conflict development - Iran


Summary:

There are certain difficulties in the American economy in the form of a slowdown in economic growth, but taking into account the mood of the monetary authorities and the course of the current president, it is quite likely that 2020 will not bring any global upheavals and catastrophes to the US stock market. Most likely, moderate growth with moderate volatility with possible corrections will prevail in the market. Target level for SP500 at the end of 2020: 3500 - 3600 points.


December management results:

According to the results of the month, Element ONE fund increased its NAV by more than 2%, the unit value has grown to the level of USD 1,688.03. In general, the year for the fund's investors turned out to be very positive - the value of clients assets from the beginning of 2019 to December 31 2019 added almost 20% (before deducting fees for success), which makes the past year the most successful in the history of the fund. Despite all of the said above, the Element ONE fund will soon reduce its position in high-multiplier IT companies and shift its focus to dividend stocks. In addition to strategic options for CALL on VIX, in the 1st quarter of 2020, from 10 to 15 percent of ETFs for gold will be purchased as hedging instruments.
Raison Asset Management wishes you Happy Holidays and a Happy New Year!

We are grateful that you trust us. Wishing a new year filled with prosperity, joy, contentment in your favorite business and life.

The outgoing 2019 will be remembered for outstanding achievements and results that we will undoubtedly improve with you!

We remind you that in connection with the new year holidays, information about the net asset value of the funds and the share price will be provided as soon as our counterparties, represented by brokers, banks and custodians, prepare and submit reports. Accordingly, depending on the type of Fund, assets included in its structure, as well as contractors, such information may be provided no earlier than January 3, 2018, and no later than January 15, 2020. The value of the assets will be recorded at the end of the settlement period in accordance with the terms of the investment memoranda. All subscriptions and redemptions will be made after NAV calculations no later than January 20th, 2020.

Looking forward to working with you in 2020 and further!

Element ONE


Issuer: ELEMENT ONE LTD 
ISIN Number: VGG299771086
Issue Description: USD CL B SHS
ISO CFI: CICXXX

SP 500 showed an increase of 3.4%, exceeding the figure of 3150 points, in November the Element ONE fund overtook the index and showed a yield of 4.23%. The price of the fund’s unit at the end of the month reached $ 1,652.91.

Against the backdrop of external positive, gold fell by more than 3% and closed the month at around $ 1,463.

On November 2, US employment data was released, showing 128,000 new jobs created in October 2019, with expectations of 89,000.

On November 7, news came from the Ministry of Commerce of the PRC on arrangements for a proportional reduction in tariffs by the United States and China.

On November 14, German GDP data for the 3rd quarter of 2019 were published, showing an increase of 0.1%. Q3 results were better than expected, but there is still a recession in the industrial sector.

On November 27, US GDP data for the 3rd quarter were published. The growth made up to 2.1% and turned out to be slightly higher than expected, in addition, the demand for means of production increased quiet strongly + 1.2%, with expectations of -0.3%.

According to the monthly results, the best returns in the portfolio were shown by the shares of Docusign (Nasdaq: DOCU). In November, the company increased its capitalization by 7.58%. The company has been providing electronic document management services since 2003, has more than 500,000 paid users, and shows a steady growing revenue. In the latest quarterly report, the company showed an increase of 40% compared to the 3rd quarter of 2018.

Mining.VG


Issuer: RAM Data Technologies INVT LTD
CUSIP Number: G7369L 106
ISIN Number: VGG7369L1067
Issue Description: EUR CL C SHS
ISO CFI: CICJMS

After unceasing growth and reaching a maximum value of Bitcoin mining difficulty by the end of November, this indicator began to decline and returned to the level of early October. Nevertheless, the exchange rate plummeted the whole November finally stopping at €6 875 mark ( with €8 282 at the start of the month).

By the end of the moth ETH exchange rate made up to €138 with a value of €164 at the beginning of the month. At the same time, the complexity of the network increased only by 2,5%. With indicators like this the fund showed logical decline, but only for little more than 1%, however we look positively in the future. The stock price, taking into account the accumulated coupon at the end of the month, amounted to € 970.25.

After the May halving of Bitcoin, we, like many industry experts expect an increase in the price of the currency. In our opinion, ome even make a too bold forecasts for the cost of BTC. Thus, Anthony Pompliano, the founder and partner of Morgan Creek Digital Assets, said that after halving Bitcoin will reach $ 100,000, though not immediately, but by the end of 2021. According to Pompliano, Bitcoin entered a two-year growth phase, however the coin's volatility in this period can reach up to 30%.

Element ONE


Issuer: ELEMENT ONE LTD 
ISIN Number: VGG299771086
Issue Description: USD CL B SHS
ISO CFI: CICXXX

The start of October '19 was taught, for the first three working days, the S&P 500 declined below 2860 basis points. However, by the end of the trading session on the 3rd of October, bulls out-weighted the overall movement. By the end of the month, S&P500 added impressive 2,04%.

On the 10th of October British Pound exchange rate to US Dollar increased by 1,85 b.p. overnight due to positive news regarding Brexit deal. Though out the month GBP performed a considerable growth with 5,33% hike.

On the 30th of October, the Fed lowered the interest rate by 0,25%. The aligned statement was backed with Federal Open Market Committee data on active Labour market and stable economic activity growth. Unemployment rate maintains on a low level, and movement to 1,5%-1,75% ranges were expected. Dollar index has lost more than 2% slightly by the end of a month

On 31st of October, we have added Bitcoin (BTC) futures contracts to our fund portfolio. We constantly analysing the price changes, as the volatility of underlying assets is higher compared to the volatility of stocks that we are working with. The investment horizon is 1–2 months. The following position has underperformed, due to short-term correction of cryptocurrency market and negatively affected on fund's performance.

Vmware (NYSE: VMW) shares, included in the portfolio at the end of September, have grown by 5,47%. We increased the Stop-Loss for the following security up to $150.
As a result of October, Element ONE pie fund performance was positive and added 1,7% in its price.

Mining.VG


Issuer: RAM Data Technologies INVT LTD
CUSIP Number: G7369L 106
ISIN Number: VGG7369L1067
Issue Description: EUR CL C SHS
ISO CFI: CICJMS

During October '19 mining difficulty continued to increase; however, the pace of upward movement has slowed down. Difficulty index for Ethereum almost haven't changed from the beginning of the month, while for Bitcoin it increased to 0,9317Т, which is three times lower comparing to September '19.

It is essential to mention the positive comments regarding stablecoins from government representatives from around the world. The Head of Federal Reserve Bank of Philadelphia, Patric Hacker, said that stablecoins issued by Central Banks is a matter of time. Germany Minister of Finance, Olaf Sholtz was supportive for establishment of digital Euro, while Swiss Central Bank and SIX exchange are looking into the opportunity to issue digital Swiss Franc for enhancement of exchange trade activity.

On top of that, the business field is adopting digital currencies. IKEA becomes the first company in Iceland to accept payment with a help Ethereum smart-contract transaction. The cryptocurrency adoption entering in variety of business sectors, meaning that there is a bright future for this type of assets.

Exchange rates for significant cryptocurrencies have appreciated during October - Bitcoin added +10% in its price, while Ethereum +1%. Nevertheless, the presence of accounting amortisation within the fund structure didn't allow to obtain positive dynamics - the price of fund's stock, including accumulated coupon, has declined by 0,47% compared to the beginning of October. We are full of optimism regarding the end of 2019 and planning to keep positive performance for the year.
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