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Few winners emerge from sapped energy funds

WHAT ARE WE LOOKING FOR?

How much energy funds have sagged.

A global economic slowdown, and falling commodity prices have zapped energy stocks. The Paris-based International Energy Agency yesterday added more pessimism, forecasting a drop in global oil demand in 2009 for a second consecutive year - the first time since 1982-83.

Crude oil prices, which have plunged from a peak of $147 (U.S.) a barrel last summer, lurched between $42 and $47 this week amid uncertainty as to whether OPEC leaders would cut oil output this weekend. Benchmark crude for April delivery fell 78 cents yesterday to $46.25 on the New York Mercantile Exchange

TODAY'S SEARCH

We asked Globefund analyst Victor Tan to screen funds with the words "energy" or "oil" or "natural gas" to capture investments in the sector. We focused on the one-year return to Feb. 28, but added long-term performance and year-to-date returns to Thursday. U.S.-dollar and duplicate funds as well as those with a record of less than one year were then excluded

WHAT DID WE TURN UP?

A few winners in a sea of depressed energy funds.

Among actively managed investments, manager Peter Linder's DeltaOne Strategic Energy Fund lost 87 per cent.

Sprott Energy, which is managed by Eric Sprott, shed 68 per cent. This fund holds smaller companies whose stocks have had a tougher time in the bear market. Top holdings at Dec. 31 included solar-grade silicon maker Timminco Ltd., a former high flier whose stock has been creamed.

A beacon of light amid the sea of red surfaced in the bear versions of the Horizons BetaPro energy-focused exchange-traded funds (ETFs). They are designed to double the daily returns opposite to those of the index they track. It's a form of shorting, and can be successful if the bet is right.

The HBP NYMEX Crude Oil Bear + ETF and HBP NYMEX Natural Gas Bear ETF produced off-the-chart returns of 293 per cent and 262 per cent, respectively, over one year.

Creststreet Alternative Energy Fund was the only actively managed mutual fund in positive territory, posting a stellar gain of nearly 94 per cent.

It is among a handful of Canadian mutual funds that have the regulatory nod to do a limited amount of shorting, and they do take advantage of it.

Manager Steve Martin said he was aggressively shorting stocks and ETFs over the past year, while about 25 per cent of the assets went to "opportunistic" trades not necessarily focused on alternative energy.

Longer term, some investors have fared well in energy funds. CI Signature Global Energy Corp., now run by Scott Vali, has the best 10-year record with an average annual return of 16 per cent.

swon@globeandmail.com

Energy Funds as of Feb 28, 2009
(As of Feb 2009)Latest% returns ( as of Feb. 28, 2009)
Fund nameCategoryAssets ($-mil)MERYTD1-yr3-yr5-yr10-yr
HBP NYMEX Crude Oil Bear + ETFAlternative Strategies29.060.6293.0
HBP NYMEX Natural Gas Bear+ETFAlternative Strategies6.563.9262.4
Creststreet Alternative Energy*Miscellaneous26.54.402.993.8
HBP S&P/TSX Energy Bear + ETFAlternative Strategies24.75.1-0.7
Full Cycle Energy LP IAlternative Strategies-3.2-30.0-9.22.6
CI Signature Global Energy Corp ClNatural Resources Equity113.22.34-6.9-34.7-7.810.415.9
Dynamic FocusPlus Energy Inc TrustNatural Resources Equity293.62.25-11.1-34.7-11.34.0
Sentry Select Canadian Energy GrwthNatural Resources Equity11.73.08-6.1-40.2-17.3-0.713.4
Front Street Energy Gwth Fund Ser-IRetail Venture Capital7.190.2-41.8-16.3-2.1
iShares CDN Energy Sector IndexNatural Resources Equity482.90.55-8.8-42.9-13.05.5
CIBC EnergyNatural Resources Equity96.42.35-6.4-42.9-16.23.113.4
Dynamic Global Energy ClassNatural Resources Equity16.54.12-8.6-43.1
Creststreet Energy OpportunitiesAlternative Strategies3.57.3-43.7-11.3
Altamira Energy FundNatural Resources Equity11.32.88-11.7-44.7-14.3
TD EnergyNatural Resources Equity149.02.15-6.7-45.8-16.62.612.7
Full Cycle Energy Concentrated LPAlternative Strategies-10.7-45.9
Sentry Select Energy IncomeNatural Resources Equity-18.3-46.8-22.5-5.7
MFi Energy Fund Corporate ClassNatural Resources Equity-12.0-50.4
Criterion Global Clean Energy CH-HMiscellaneous3.3-10.3-52.6
RBC Global EnergyNatural Resources Equity253.82.05-8.2-53.2-18.71.012.7
Northern Rivers Global Energy LPAlternative Strategies3.2-5.0-53.5-13.8
Claymore Natural Gas Commodity ETFMiscellaneous8.1-28.1-55.0
Qwest Energy Canadian Resource ClNatural Resources Equity3.48-19.3-55.4
Claymore Oil Sands Sector ETFNatural Resources Equity17.20.60-2.7-55.5
Bissett Energy CC-FNatural Resources Equity0.31.42-15.2-58.3
EnerVest Natural Resources Fund LtdNatural Resources Equity14.62.95-9.9-60.1-31.3-9.8
Ark Aston Hill Energy ClassNatural Resources Equity3.4-15.4-66.0
Sprott EnergyNatural Resources Equity59.02.86-8.6-68.0-24.1
HBP S&P/TSX Energy Bull + ETFAlternative Strategies126.0-20.9-79.3
DeltaOne Strategic EnergyAlternative Strategies-38.9-87.0-52.0-26.0
HBP NYMEX Natural Gas Bull+ETFAlternative Strategies92.8-47.5-90.1
HBP NYMEX Crude Oil Bull + ETFAlternative Strategies512.7-55.7-95.2
S&P 500 Composite-18.6-44.8-16.9-8.5-5.1
MSCI World ($ Cdn)-14.9-31.0-11.6-5.5-3.8
S&P/TSX Composite Index-9.6-40.2-11.4-1.62.6
*MER does not include performance fee.
SOURCE: GLOBEFUND

© 2007 The Globe and Mail. All rights reserved.

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