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Mutual Fund News

Some funds reap gains despite bloodbath

WHAT ARE WE LOOKING FOR?

Funds making the bucks.

It hasn't been easy for managers to make money as stock markets continue to be hammered relentlessly.

After last year's bloodbath, the S&P/TSX composite index shed another 10 per cent for the first two months, while the S&P 500 plunged an even more depressing 19 per cent.

TODAY'S SEARCH

We screened returns among all funds with at least a one-year record to find the best performers for the first two months. U.S.-dollar, duplicate and also retail venture capital funds were excluded.

WHAT DID WE TURN UP?

Plenty of alternative strategies [hedge and exchanged-traded funds], natural resources and precious metals funds.

Not surprisingly, funds sitting at or near the top of the chart include the bear versions of Horizons Betapro exchanged-traded funds (ETFs). They're designed to give twice the daily returns opposite to those of the index they track - a form of shorting.

The strongest performance came from the HBP NYMEX Natural Gas Bear+ ETF, which surged a robust 64 per cent. HBP S&P/TSX Financial Bear+ ETF rose 27 per cent.

Among actively managed funds, the top performer was Mavrix Explorer Fund. The resource fund gained 28 per cent, helping to ease the pain from last year's steep loss.

Manager Paul MacDonald's "opportunistic" fund had a 20-per-cent weighting in gold stocks going into January. After profit-taking as the gold price surged towards $1,000 (U.S.) an ounce in late February, he plowed some money into stocks such as credit-strapped Nova Chemicals Corp.

Shares of the chemical maker, which were 9 per cent of the fund, popped after the company agreed to a $499-million takeover from Abu Dhabi's International Petroleum Investment Co.

Among hedge funds, Mackenzie Alternative Strategies appears to be the leader with a 26-per-cent return. But that's not really the case.

That fund, which is being wound down, has stumbled because of a $6.5-million (Canadian) exposure to an alleged Ponzi scheme run by New York money manager Bernard Madoff, who is now charged with securities fraud. That investment was written down to zero late fall.

This year's performance largely stems from Mackenzie Financial Corp. redeeming seed money in the fund to cover the Madoff-related loss. That move boosted the value of the hedge fund by about 22 per cent, and helped its investors recoup that loss as opposed to making more money.

Sprott Hedge LP, meanwhile, was the top-performing hedge fund with a 16-per-cent return. Eric Sprott's strategy to be bullish on gold, while shorting financials, seems to be playing out nicely.

swon@globeandmail.com

How funds fared until Feb 28, 2009

(As of Jan '09)Latest(Feb. 28)Calendar year % returns
Fund nameCategoryAssets ($-mil)MERYTD % rtn20082007200620052004200320022001
HBP NYMEX Natural Gas Bear+ETFAlternative Strategies6.063.9
HBP NYMEX Crude Oil Bear + ETFAlternative Strategies65.860.6
Mavrix ExplorerNatural Resources Equity1.52.8028.3-67.18.19.8-12.54.168.9
Sentry Select Mining Opportunity ClNatural Resources Equity17.52.7827.8-69.810.0
HBP S&P/TSX Financials Bear + ETFAlternative Strategies27.727.251.0
Mackenzie Alternative StrategiesAlternative Strategies18.23.4325.7-57.42.58.14.93.98.4-2.68.1
Sprott Gold and Precious MineralsPrecious Metals Equity264.02.8222.4-49.6-16.456.216.3-18.872.4116.2
FrontierAlt Resource Capital Cl-ANatural Resources Equity4.519.7-72.7
BMG BullionFund-AMiscellaneous3.2417.7-4.12.524.512.5-4.0-2.8
Sprott Hedge L.P. I-Cl AAlternative Strategies579.05.3916.4-4.323.825.511.925.5-5.874.064.2
Front Street Mining Opportunities FAlternative Strategies25.015.3-67.718.256.8
Arrow U.S. Equity IncomeAlternative Strategies27.115.2-66.2
Sentry Select Precious Metals GrwthPrecious Metals Equity206.32.6615.1-37.19.774.035.3-11.324.544.423.6
Arrow Enso GlobalAlternative Strategies21.114.6-44.112.513.38.78.518.4
HBP 60 Bear + ETFAlternative Strategies105.314.435.8
Sprott Bull/Bear RSP AAlternative Strategies153.08.2414.28.223.224.011.522.4-4.1
Dynamic Power Emerging Markets*Alternative Strategies47.17.6011.4-74.340.651.7
AGF Precious MetalPrecious Metals Equity418.12.6011.0-36.46.763.919.4-7.964.5103.824.4
HBP COMEX Gold Bullion Bull + ETFAlternative Strategies114.210.8
Mackenzie Univ Wld Prec Metal ClassPrecious Metals Equity62.32.5110.0-45.07.653.830.1-19.431.464.347.3
S&P 500 Composite-18.6-38.53.513.63.09.026.4-23.4-13.0
S&P/TSX Composite Index-9.6-35.07.214.521.912.524.3-14.0-13.9
*MER to June 30, 2008. New MER in June, 2009.
SOURCE: GLOBEFUND

© 2007 The Globe and Mail. All rights reserved.

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