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Commentary iMGP Funds, 2021 Semi-Annual Shareholder Letter

Dear Fellow Shareholder,

The global economic recovery gained momentum in the second quarter of 2021 as COVID-19 vaccinations continued to spread across the globe, albeit unevenly distributed. Monetary and fiscal policy remained accomodative, providing further liquidity to the financial markets, and corporate earnings were very robust as consumers emerged from lockdown. Given this supportive fundamental backdrop, global stock markets continued to march higher, producing strong gains for the first half of the year.

The S&P 500 Index led the charge, gaining 8.55% in the second quarter and 15.25% for the year to date. Developed international stocks (MSCI EAFE Index) rose 5.17% in Q2 and 8.83% year to date. Emerging-market stocks (MSCI Emerging Markets Index) gained 5.05% in Q2 and 7.48% year to date.

Within the U.S. stock market, the so-called reflation rotation from growth to value stocks that started late last year reversed in the second quarter, with the Russell 1000 Growth Index gaining 11.93% against a 5.21% gain for the Russell 1000 Value Index. However, value stocks remain about 400 basis points ahead of growth stocks for the year.

Among smaller company stocks, the Russell 2000 Index is up 17.54% for the year, but “only” gained 4.29% in the second quarter. Small-cap value stocks remain the top-performing segment of the U.S. market this year, up 26.69%.

Turning to the fixed-income markets, the second quarter registered gains across most segments. Inflation concerns were top of mind for investors. The Federal Reserve acknowledged recent inflation numbers were higher than expected, but they believe this is temporary (due to pandemic-related dislocations) and core inflation will subside to around 2% by 2022. The Fed reiterated that any rate hikes are still a long way off. Against this backdrop, the 10-year Treasury yield, which started the year just below 1%, rose to 1.74% at the end of the first quarter, but then fell back to 1.44% by the end of Q2.

With interest rates declining, the Bloomberg Barclays U.S. Aggregate Bond Index gained 1.83% in the second quarter. However, this core bond index is still down 1.60% on the year after the sharp rise in Treasury yields in the first quarter. High-yield bonds (ICE BofA Merrill Lynch U.S. High Yield Cash Pay Index) gained 2.77% in Q2 and are up 3.70% year to date.

The iMGP Funds posted solid absolute and relative returns for the first half of 2021.

  • iMGP Equity Fund gained 16.60%, beating the 15.11% return for the Russell 3000 Index and the 15.25% return for the S&P 500 Index.
  • iMGP International Fund gained 8.66% compared to 9.16% for the MSCI ACWI ex USA Index and 8.83% for the MSCI EAFE Index.
  • iMGP Alternative Strategies Fund gained 4.12% compared to 0.09% for 3-Month LIBOR and 5.53% for the Morningstar Multistrategy category.
  • iMGP High Income Alternatives Fund gained 4.34% compared to a loss of 1.60% for the Bloomberg Barclays U.S. Aggregate Bond Index and a 3.70% gain for the ICE BofA Merrill Lynch U.S. High Yield Cash Pay Index.
  • iMGP SBH Focused Small Value Fund gained 16.37% compared to 26.69% for the Russell 2000 Value Index and 17.54% for the Russell 2000 Index.
  • iMGP Oldfield International Value Fund gained 16.32% versus 10.68% for the MSCI EAFE Value Index and 8.83% for the MSCI EAFE Index.

Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the funds may be lower or higher than the performance quoted. To obtain standardized performance of the funds, and performance as of the most recently completed calendar month, please visit

We believe the iMGP Funds can fill a valuable role within a diversified investment portfolio. Each of the iMGP Funds is sub-advised by highly disciplined, experienced, and skilled investors who we believe can outperform their benchmark over a market cycle.

On our four equity funds, each manager runs a distinctive, concentrated, high-conviction stock portfolio, with the goal of materially outperforming their respective market index over the long term. Our Alternative Strategies Fund, which is coming up on its 10-year anniversary in September, can serve as a core, all-weather, lower-risk yet opportunistic holding that provides access to proven managers and strategies, differentiated sources of return, and beneficial diversification relative to traditional bond and stock investments. The High Income Alternatives Fund, coming up on its three-year anniversary, is intended to be a complement to traditional fixed-income allocations, seeking long-term returns that are significantly higher than core fixed-income and comparable to high-yield bonds, but with lower volatility and downside risk than high-yield due to the fund’s diversified sources of return and manager flexibility.

As always, we thank you for your continued trust and confidence. Our commitment and confidence are reflected in the collective personal investments in the funds by iM Global Partner employees and the funds’ trustees of over $20 million, as of June 30, 2021.


Jeremy DeGroot, President and Portfolio Manager

Jack Chee, Portfolio Manager

Rajat Jain, Portfolio Manager

Jason Steuerwalt, Portfolio Manager


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iMGP Funds emails provide investors a way to stay in touch with us and receive information regarding the funds and investment principles in general. Topics may include updates on the funds and managers, further insights into our investment team’s processes, and commentary on various aspects of investing.


Performance discussions for the Alternative Strategies Fund is specifically related to the Institutional share class.

Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.

Diversification does not assure a profit nor protect against loss in a declining market.

Litman Gregory Fund Advisors, LLC has ultimate responsibility for the performance of the iMGP Funds due to its responsibility to oversee the funds’ investment managers and recommend their hiring, termination, and replacement.

Mutual fund investing involves risk; loss of principal is possible.

Multi-investment management styles may lead to higher transaction expenses compared to single investment management styles. Outcomes depend on the skill of the sub-advisors and advisor and the allocation of assets amongst them.

Each of the funds may invest in foreign securities. Investing in foreign securities exposes investors to economic, political, and market risks and fluctuations in foreign currencies. The iMGP International Fund will invest in emerging-market countries, which involve additional risks such as government dependence on a few industries or resources, government-imposed taxes on foreign investment, or limits on the removal of capital from a country, unstable government, and volatile markets. Each of the funds may invest in the securities of small companies. Small-company investing subjects investors to additional risks, including security price volatility and less liquidity than investing in larger companies. Investments in debt securities typically decrease when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in mortgage-backed securities include additional risks that investor should be aware of including credit risk, prepayment risk, possible illiquidity, and default, as well as increased susceptibility to adverse economic developments. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management, and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. The funds may invest in master limited partnership units. Investing in MLP units may expose investors to additional liability and tax risks. The funds may make short sales of securities, which involves the risk that losses may exceed the original amount invested. Merger arbitrage investments risk loss if a proposed reorganization in which the fund invests is renegotiated or terminated.

Some of the comments are based on current management expectation and are considered “forward-looking statements”. Actual future results, however, may prove to be different from our expectations. You can identify forward-looking statement by words such as “estimate”, “may”, “expect”, “should”, “could”, “believe”, “plan”, and similar terms. We cannot promise future returns and our opinions are a reflection of our best judgment at the time this report is compiled.

Opinions expressed are subject to change, are not guaranteed, and should not be considered recommendations to buy or sell any security.

The views herein are those of Litman Gregory Fund Advisors, LLC at the time the material is written and may not be reflective of current conditions.

Leverage may cause the effect of an increase or decrease in the value of the portfolio securities to be magnified and the fund to be more volatile than if leverage was not used.

Investments in absolute return strategies are not intended to outperform stocks and bonds during strong market rallies.

Please click HERE for index definitions. For industry terms and definitions, click HERE.

Effective July 31, 2020 the name of the Litman Gregory Masters Funds  was changed to iMGP  Funds.

The iMGP Funds are distributed by ALPS Distributors, Inc.  LGM001106 exp.    2/15/2022