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Mutual Fund News

How much energy exposure do your funds have?

rcarrick@globeandmail.com

Highest energy exposureEffectiveAs of July 31 '08
As of July 2008date of% Energy1-month3-yr
Fund nameCategory Assets ($-mil)portfolioweighting% returnQuartile
Investors Income Trust Fund-CCdn. Income Trust Equity282.45/30/200854.8-6.501
Acuity Income TrustCdn. Income Trust Equity179.68/29/200850.3-6.252
Norrep Income Growth Class-ACdn. Income Trust Equity29.77/31/200848.1-7.24
IA Clarington Tactical Income-T8Cdn. Income Trust Equity50.46/30/200847.4-7.563
Sprott GrowthCdn. Focused Small/Mid Cap Eq288.67/31/200847.0-14.09
Montrusco Bolton Equity IncomeCdn. Income Trust Equity153.66/30/200846.9-4.814
Caldwell CanadaCdn. Small or Mid Cap Equity6.66/30/200846.7-12.191
Dynamic Power Cdn GrowthCdn. Focused Equity1,822.75/30/200845.8-11.921
Altafund Investment Corp.Cdn. Equity72.57/31/200845.3-10.001
Lakeview Disp Leadership Hi Inc ACdn. Small or Mid Cap Equity167.47/31/200844.9-5.413
Fidelity Income Trust-ACdn. Income Trust Equity47.46/30/200842.8-5.511
Renaissance Diversified IncomeCdn. Income Trust Equity229.47/31/200842.4-6.584
Bissett Income-FCdn. Income Trust Equity47.76/30/200841.8-5.243
Dynamic Power Cdn Growth ClassCdn. Focused Equity146.05/30/200841.6-11.921
DMP Power Canadian Growth ClassCdn. Focused Equity18.65/30/200841.2-12.061
Middlefield Enhanced YieldCdn. Income Trust Equity1.67/31/200840.7-4.093
JOV Canadian Equity ClassCdn. Equity8.27/31/200840.1-12.92
Sprott Small Cap Equity-ACdn. Small or Mid Cap Equity7/31/200840.0-8.67
GGOF Monthly High Income ClassicCdn. Income Trust Equity96.37/31/200839.8-5.863
Marquis Enhanced Canadian Equ Pl-CCdn. Equity53.95/30/200839.2-7.052
BMO Income TrustCdn. Income Trust Equity29.54/30/200839.2-5.81
Renaissance Cdn Monthly IncomeCdn. Income Trust Equity397.17/31/200839.2-6.343
AGF Canadian All Cap EquityCdn. Equity9.07/31/200839.1-9.54
Bissett Small Cap-FCdn. Small or Mid Cap Equity52.66/30/200838.8-8.984
Dynamic FocusPls Diversifd IncomeCdn. Income Trust Equity1,350.85/30/200838.4-5.453
Norrep Q Class-ACdn. Equity84.07/31/200837.9-10.683
IA Clarington Cdn Conservative EqtyCdn. Equity270.76/30/200837.6-4.893
Renaissance Millennium High IncomeCdn. Small or Mid Cap Equity964.27/31/200837.3-4.073
JOV Talisman-ACdn. Focused Equity18.17/31/200836.7-9.344
iShares CDN Value IndexCdn. Dividend and Income Equity27.87/31/200836.4-3.95
IA Clarington Canadian GrowthCdn. Equity46.76/30/200836.3-6.623
iShares CDN SmallCap IndexCdn. Small or Mid Cap Equity27.57/31/200835.9-7.84
Saxon High Income FundCdn. Income Trust Equity154.37/31/200835.6-5.722
TD Cdn Small-Cap EquityCdn. Small or Mid Cap Equity437.17/31/200835.5-6.724
IG AGF Cdn Diversified Growth-CCdn. Small or Mid Cap Equity231.95/30/200835.5-10.032
Acuity Growth and IncomeCdn. Dividend and Income Equity340.28/29/200835.4-7.652
Mackenzie Sentinel Income Trust-ACdn. Income Trust Equity28.67/31/200834.9-5.75

SOURCE: GLOBEFUND

WHAT WE'RE UP TO

Notice how falling oil prices torpedoed the Canadian stock market this week? It was a slick move for an equity fund manager to have loaded up on oil and gas stocks over the past couple of years, but energy right now is a big drag on performance. Let's see which funds have the most exposure to this sector.

TODAY'S SEARCH

Funds in all the various Canadian equity and balanced categories were ranked according to the percentage of their holdings in the energy sector. To get a sense of how a fund's energy exposure has played out both in the short and long term, check out the one-month returns and the three-year quartile ranking. Quartiles divide funds in a category into four groups based on returns. First quartile is tops, fourth is the basement.

SO WHAT DID WE TURN UP?

A lot of funds with one-third to half of their assets in the energy sector as of their most recent portfolio disclosure to Globefund.com. Suggestion: If you own Canadian equity or balanced funds of any type, take a moment to monitor their energy weightings. For better and for worse, energy stocks have been a major market driver for a long time now and it's important to know your level of exposure.

The funds on our list have sustained varying levels of damage as a result of their energy exposure in the month to July 31, but the common thread is that each one is down significantly. More aggressive funds have taken the worst hits, but income-oriented funds in the Canadian income trust category have been hit as well.

It turns out that energy dominates the income trust sector even more than it does the broader S&P/TSX composite. Energy accounted for almost two-thirds of the benchmark S&P/TSX capped income trust index at mid-year, compared with about one-third for the composite.

While you're looking at the energy weighting in the funds you own, check the returns you've had over the past three to five years to see how they match up against other funds in the same category. If you've done well, say first or second quartile, then any recent losses should be more tolerable. Combine heavy energy exposure, poor medium-term results and sharp losses recently and you have a fund with real problems.

© 2007 The Globe and Mail. All rights reserved.

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