WHAT ARE WE LOOKING FOR?
Given the downturn in the major markets this year - including the S&P/TSX composite index off nearly 5 per cent - finding stock funds still in the black is becoming rarer.
Smaller-company funds can offer better gains because of the growth potential of their stocks, but they tend to hold riskier, less liquid securities that can often be jettisoned by investors during tough times.
We examined the year-to-date returns to Aug. 11 of Canadian small-to mid-cap equity, and Canadian focused small-mid cap equity (which can invest up to 50 per cent in foreign stocks) funds.
SO WHAT DID WE TURN UP?
The $914.3-million Resolute Performance Fund run by maverick manager Tom Stanley was alone in garnering a double-digit return - 19.2 per cent so far this year - and well ahead of the pack.
The high-conviction fund, which owns less than 20 stocks, is heavily invested in the energy sector. And he remains unfazed by the 23-per-cent decline in the price of crude oil since July 11. Energy stocks have cratered with crude settling at $113.01 a barrel (U.S.) in New York yesterday.
While his fund had more of a natural gas tilt last fall, it is now more balanced between oil and gas stocks following some recent bargain hunting. "I've had my catcher's mitt out," Mr. Stanley said yesterday.
"I have been very bullish on the energy sector since the second quarter of 2000," he said. "There has been a significant correction of about 15 per cent or more roughly every year since the beginning of 2002. That's the nature of bull markets."
His upbeat outlook stems from a continued belief that energy supply remains tight, while demand is rising in Asia and countries like Russia. Not withstanding the recent rally in the U.S. dollar, he expects the greenback will be weak over the longer term, and help keep oil prices high.
While Mr. Stanley usually keeps his cards close to his vest, he divulged that his biggest winner this year has been Duvernay Oil Corp., a natural gas player which is being bought by Royal Dutch Shell PLC. And he holds Crew Energy Inc., another gas play.
So what has he been buying? One is Suncor Inc., a large-cap oil sands play. "We are generally small cap, but I am prepared to buy larger stocks if the value and opportunities are there," he said. "It is very important to have a flexible approach."
He is not so flexible, however, when it comes to welcoming gobs of money. His fund is sold by offering memorandum with a $150,000-minimum investment through a restricted network of only 15 individuals in Ontario, Alberta and British Columbia. "We are not actively seeking money," he said. "Our goal is to try to be the best - not the biggest."
|Top small-cap funds||% rtn|
|(as of July '08)||Latest||YTD to||% return (as of July 31 '08)|
|Fund name||Category Assets ($-mil)||MER||Aug 11||1-yr||3-yr||5-yr||10-yr|
|Resolute Performance||Cdn. Small or Mid Cap Equity||914.3||2.94||19.2||16.7||33.2|
|Saxon Microcap||Cdn. Small or Mid Cap Equity||2.9||2.92||3.4|
|PH&N Vintage-A||Cdn. Focused Small/Mid Cap Eq||82.0||1.85||1.4||4.4||11.1||12.7||7.7|
|Lakeview Disp Leadership Hi Inc A||Cdn. Small or Mid Cap Equity||167.4||2.26||0.8||5.1||5.6|
|Fidelity Special Situations-A||Cdn. Focused Small/Mid Cap Eq||110.8||2.55||-0.8||18.3|
|JOV Diversified Monthly-A||Cdn. Small or Mid Cap Equity||3.6||2.34||-2.2||4.0||2.8|
|Sentry Select Small Cap Income||Cdn. Small or Mid Cap Equity||38.1||2.43||-2.9||2.6||8.7|
|NexGen Canadian Growth-CG||Cdn. Small or Mid Cap Equity||0.8||2.65||-3.5||2.6|
|Steadyhand Small-Cap Equity||Cdn. Small or Mid Cap Equity||7.2||-4.0||0.8|
|Beutel Goodman Small Cap||Cdn. Small or Mid Cap Equity||273.1||1.39||-4.1||-3.2||8.1||11.6||12.7|
|CI Can-Am Small Cap Corporate Class||Cdn. Small or Mid Cap Equity||89.6||2.31||-4.3||-9.8||5.6||16.5||10.3|
|IG Beutel Goodman Cdn. Small-Cap-C||Cdn. Small or Mid Cap Equity||263.2||3.14||-5.3||-5.1||6.3||9.9||11.4|
|Brandes Sionna Canadian Small Cap||Cdn. Small or Mid Cap Equity||6.2||2.49||-5.9||-11.6|
|Fidelity Canadian Growth Company-A||Cdn. Small or Mid Cap Equity||427.6||2.49||-6.1||-1.0||7.6||12.4||8.6|
|NexGen NA Small/Mid Cap-CG||Cdn. Small or Mid Cap Equity||0.9||2.65||-6.2||-2.3|
|Dynamic FocusPlus Small Business||Cdn. Small or Mid Cap Equity||74.6||3.08||-6.6||-2.2||14.0||18.9||7.6|
|NexGen North American Value-CG||Cdn. Focused Small/Mid Cap Eq||0.1||2.65||-6.9||-4.7|
|Bissett Microcap-F||Cdn. Small or Mid Cap Equity||58.2||2.31||-7.1||-12.5||5.8||14.7||17.8|
|Sprott Small Cap Equity-A||Cdn. Small or Mid Cap Equity||0.2||5.92||-7.4|
|Northwest Specialty Innovations||Cdn. Small or Mid Cap Equity||80.1||2.61||-7.5||-10.8||4.3||12.7|
Note: List includes only funds which are valued daily SOURCE: GLOBEFUND
© 2007 The Globe and Mail. All rights reserved.
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