Dear Clients and Friends,
Financial markets throughout much of the world have remained at elevated levels1, with enthusiasm surrounding artificial intelligence (“AI”) serving as one of the primary drivers of investor sentiment. The potential for productivity gains in many industries from AI adoption has driven enormous capital spending for the necessary infrastructure, which is likely to continue over the near term. Valuation levels for businesses which are direct beneficiaries remain quite high2.
In our view, signs of investor complacency remain evident as inflation remains stubborn, keeping central banks from cutting interest rates, and debt levels in most economies are high. Easing geopolitical tensions in the Middle East have contributed to reduced oil prices, which may provide some inflationary relief. Consumer spending is steady, benefitting from the wealth effect of the aforementioned strong financial markets3.
Investors in capitalization-weighted index funds are chasing the markets’ strength. As of this writing, an investment in an S&P 500 index fund results in approximately 40% of the portfolio allocated to a handful of the highly valued technology companies in that index4.
For us at VELA, we consider risk to be the permanent loss of capital, which can occur when underwriting standards are lax, as they tend to be during periods of investor euphoria. We do not invest in businesses simply because of their weight in a particular index. Our investment decisions are based on our assessment of valuation and risk, consistent with our fiduciary duty to clients.
The “A” in VELA represents our alignment of interests with our clients. My entire investment portfolio is invested in our six VELA mutual funds, ranging from short duration fixed income securities to small cap equity securities. Understanding our dedication to our valuation-centric investment philosophy (the “V”), implemented by colleagues with decades of investment experience (the “E”), provides me with confidence over the long term (the “L”), and I remain assured that our disciplined approach supports our objective of creating long-term value for our clients.
Sincerely,
Ric Dillon
CEO & CIO
*While the Russell 3000 index represents a broad-based equity index for comparison, under normal market conditions, the fund invests at least 80% of its assets in income producing securities, which may be a mix of equity and fixed income securities. The composition of the Fund and its returns may be more like the Fund’s secondary benchmark, a 50%50% blend between the Russell 3000 equity index and Bloomberg US Aggregate Bond index.
Mutual fund performance data quoted represents past performance. Past performance 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 may be lower or higher than the performance data quoted. Investors may obtain mutual fund performance data current to the most recent month-end by calling 833-399-1001.
The total expense ratio for the VELA Funds Class I is: Small Cap VESMX 1.09%; Large Cap Plus VELIX 1.02%; International VEITX 1.10%; Income Opportunities VIOIX 0.84%, Short Duration VESDX 0.64%.
Investors should carefully consider the investment objectives, risks, and charges and expenses of the fund before investing. The prospectus contains this and other information about the fund, and it should be read carefully before investing. Investors may obtain a copy of the prospectus by calling 833-399-1001.
Important Information:
Investing involves risk including the possible loss of principal. 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.
The Russell 2000 Index is a small-cap stock market index of the smallest 2000 stocks in the Russell 3000 Index.
The Russell 1000 Index is an unmanaged market capitalization-weighted index comprised of the largest 1,000 companies by market capitalization in the Russell 3000 Index, which is comprised of the 3,000 largest U.S. companies by total market capitalization.
The MSCI World ex US Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries excluding the United States.
The Russell 3000 Index is a market-capitalization-weighted equity index. The index tracks the performance of the 3,000 largest U.S.-traded stocks, which collectively account for roughly 97% of all U.S.-incorporated equities. The secondary index for the fund is a blend of the Russell 3000 TR (50%) and The Bloomberg Aggregate Bond Index (50%). The Bloomberg Aggregate Bond Index broadly tracks the performance of the U.S. investment-grade bond market. The index is composed of investment-grade government and corporate bonds.
The Bloomberg 1-3 Year Government/Credit Bond Index is an unmanaged index that includes all medium and larger issues of U.S. government, investment grade corporate, and investment-grade international dollar-denominated bonds that have maturities of between 1 and 3 years and are publicly issued.
The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States.
You cannot invest directly in an index.
The VELA Funds are distributed by Ultimus Fund Distributors, LLC. (Member FINRA). VELA Investment Management and Ultimus Fund Distributors are not affiliated.
VELA Investment Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
The views expressed are those of VELA Investment Management, LLC as of 07/08/2026 and are subject to change. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Third-party information in this report has been obtained from sources believed to be accurate; however, VELA makes no guarantee as to the accuracy or completeness of the information.
The VELA International Fund invests in a diversified portfolio of non-U. S. equities from a broad market capitalization spectrum. The fund may invest in non-U.S. securities and U.S. securities of companies domiciled in non-U.S. countries that may experience more rapid and extreme changes in value than a fund that invests exclusively in securities of U.S. companies. These companies may be subject to additional risks, including political and economic risks, civil conflicts and greater volatility, expropriation and nationalization risks, currency fluctuations, regulatory risk, higher transaction costs, delayed settlement, possible non-U. S. controls on investments, and less stringent investor protection and disclosure standards of U.S. market.
A complete list of holdings can be found at www.velafunds.com.
VELA Investment Management, LLC is a registered investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about VELA Investment Management, LLC, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, and/or Form CRS, which is available upon request.
Footnotes:
1MSCI World Index
2Goldman Sachs
3S&P Global
4S&P Dow Jones Indices
Dear Clients and Friends,
Financial markets throughout much of the world have remained at elevated levels1, with enthusiasm surrounding artificial intelligence (“AI”) serving as one of the primary drivers of investor sentiment. The potential for productivity gains in many industries from AI adoption has driven enormous capital spending for the necessary infrastructure, which is likely to continue over the near term. Valuation levels for businesses which are direct beneficiaries remain quite high2.
In our view, signs of investor complacency remain evident as inflation remains stubborn, keeping central banks from cutting interest rates, and debt levels in most economies are high. Easing geopolitical tensions in the Middle East have contributed to reduced oil prices, which may provide some inflationary relief. Consumer spending is steady, benefitting from the wealth effect of the aforementioned strong financial markets3.
Investors in capitalization-weighted index funds are chasing the markets’ strength. As of this writing, an investment in an S&P 500 index fund results in approximately 40% of the portfolio allocated to a handful of the highly valued technology companies in that index4.
For us at VELA, we consider risk to be the permanent loss of capital, which can occur when underwriting standards are lax, as they tend to be during periods of investor euphoria. We do not invest in businesses simply because of their weight in a particular index. Our investment decisions are based on our assessment of valuation and risk, consistent with our fiduciary duty to clients.
The “A” in VELA represents our alignment of interests with our clients. My entire investment portfolio is invested in our six VELA mutual funds, ranging from short duration fixed income securities to small cap equity securities. Understanding our dedication to our valuation-centric investment philosophy (the “V”), implemented by colleagues with decades of investment experience (the “E”), provides me with confidence over the long term (the “L”), and I remain assured that our disciplined approach supports our objective of creating long-term value for our clients.
Sincerely,
Ric Dillon
CEO & CIO
*While the Russell 3000 index represents a broad-based equity index for comparison, under normal market conditions, the fund invests at least 80% of its assets in income producing securities, which may be a mix of equity and fixed income securities. The composition of the Fund and its returns may be more like the Fund’s secondary benchmark, a 50%50% blend between the Russell 3000 equity index and Bloomberg US Aggregate Bond index.
Mutual fund performance data quoted represents past performance. Past performance 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 may be lower or higher than the performance data quoted. Investors may obtain mutual fund performance data current to the most recent month-end by calling 833-399-1001.
The total expense ratio for the VELA Funds Class I is: Small Cap VESMX 1.09%; Large Cap Plus VELIX 1.02%; International VEITX 1.10%; Income Opportunities VIOIX 0.84%, Short Duration VESDX 0.64%.
Investors should carefully consider the investment objectives, risks, and charges and expenses of the fund before investing. The prospectus contains this and other information about the fund, and it should be read carefully before investing. Investors may obtain a copy of the prospectus by calling 833-399-1001.
Important Information:
Investing involves risk including the possible loss of principal. 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.
The Russell 2000 Index is a small-cap stock market index of the smallest 2000 stocks in the Russell 3000 Index.
The Russell 1000 Index is an unmanaged market capitalization-weighted index comprised of the largest 1,000 companies by market capitalization in the Russell 3000 Index, which is comprised of the 3,000 largest U.S. companies by total market capitalization.
The MSCI World ex US Index captures large and mid-cap representation across 22 of 23 Developed Markets (DM) countries excluding the United States.
The Russell 3000 Index is a market-capitalization-weighted equity index. The index tracks the performance of the 3,000 largest U.S.-traded stocks, which collectively account for roughly 97% of all U.S.-incorporated equities. The secondary index for the fund is a blend of the Russell 3000 TR (50%) and The Bloomberg Aggregate Bond Index (50%). The Bloomberg Aggregate Bond Index broadly tracks the performance of the U.S. investment-grade bond market. The index is composed of investment-grade government and corporate bonds.
The Bloomberg 1-3 Year Government/Credit Bond Index is an unmanaged index that includes all medium and larger issues of U.S. government, investment grade corporate, and investment-grade international dollar-denominated bonds that have maturities of between 1 and 3 years and are publicly issued.
The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States.
You cannot invest directly in an index.
The VELA Funds are distributed by Ultimus Fund Distributors, LLC. (Member FINRA). VELA Investment Management and Ultimus Fund Distributors are not affiliated.
VELA Investment Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
The views expressed are those of VELA Investment Management, LLC as of 07/08/2026 and are subject to change. These opinions are not intended to be a forecast of future events, a guarantee of future results, or investment advice. Third-party information in this report has been obtained from sources believed to be accurate; however, VELA makes no guarantee as to the accuracy or completeness of the information.
The VELA International Fund invests in a diversified portfolio of non-U. S. equities from a broad market capitalization spectrum. The fund may invest in non-U.S. securities and U.S. securities of companies domiciled in non-U.S. countries that may experience more rapid and extreme changes in value than a fund that invests exclusively in securities of U.S. companies. These companies may be subject to additional risks, including political and economic risks, civil conflicts and greater volatility, expropriation and nationalization risks, currency fluctuations, regulatory risk, higher transaction costs, delayed settlement, possible non-U. S. controls on investments, and less stringent investor protection and disclosure standards of U.S. market.
A complete list of holdings can be found at www.velafunds.com.
VELA Investment Management, LLC is a registered investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about VELA Investment Management, LLC, including our investment strategies, fees and objectives, can be found in our Form ADV Part 2, and/or Form CRS, which is available upon request.
Footnotes:
1MSCI World Index
2Goldman Sachs
3S&P Global
4S&P Dow Jones Indices
Author
Ric Dillon
Jun 16, 2020
Author
Ric Dillon is one of our firm’s founders and serves as Chief Executive Officer & Chief Investment Officer, as well as a Portfolio Manager on the Small Cap and Large Cap Plus strategies.
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