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Mutual Fund News

Resource focus helps funds reach the top

swon@globeandmail.com

WHAT ARE WE LOOKING FOR?

Actively managed funds rising to the top of the heap for the first five months of 2009.

It's been a wild ride in the stock markets with steep corrections followed by a sharp rebound lately. And the jury is out as to whether the rally is a bounce in bear market or a simmering bull.

TODAY'S SEARCH

We screened all investments for the top 30 performers. We excluded index and exchange-traded funds, as well as U.S. dollar and duplicate funds.

WHAT DID WE FIND?

A triple-digit gain. And mostly resource funds or ones heavy with commodity stocks - a sector battered in last year's market collapse.

Mavrix Explorer, a natural resources mutual fund, was the star with an eye-popping 106-per-cent return that easily erases memories of last year's depressing 67-per-cent loss.

Its winners this year have included Teck Cominco Ltd., Capstone Mining Corp., Petrobank Energy and Resources Ltd., and Breakwater Resources Ltd.

The fund benefited from a recovery in resource stocks from "ridiculous lows" during the market meltdown, and rising commodity prices fuelled largely by China's infrastructure spending, manager Paul MacDonald said.

Rising commodity prices are sustainable with "bumps along the road," while an increase in base metals and natural gas prices are expected near the end of the year, he said.

Salida Multi-Strategy Hedge was also a top performer, and led the pack among alternative strategy funds with its robust 70.6-per-cent return. It's a major comeback from last year's steep 67-per-cent loss.

The fund - which can invest anywhere in the world and has a commodity bias - saw its biggest gains this year come from corporate bonds as well as energy and gold stocks, manager Brad White said.

"The combined rise in commodity and equity prices has been quite powerful," Mr. White said. "And the tightening of credit spreads helped us with the bond portfolio."

The next area for opportunities is further consolidation in the resource sector by China, he said. "The fund is positioned for attempted Chinese takeovers in sectors like base metals, oil and agriculture."

This investment theme gained momentum with Rio Tinto's decision this week to walk away from a proposed $19.5-billion (U.S.) deal that would have given the Chinese government an 18-per-cent stake in the mining giant, he said. Rio Tinto has turned to rival BHP Billiton to combine their iron ore assets in a joint venture.

The Chinese are poised to buy more hard assets, and that trend is expected to continue for the next three to five years, Mr. White suggested.

***

Best Performers for the first five months of 2009
(As of Apr 30)Latest(May 31)Annual % returns
Fund nameAsset Class Assets ($-mil)MERYTD % rtn20082007200620052004
Mavrix ExplorerNatural Res. Equity3.72.91106.4-67.18.19.8-12.54.1
Sentry Select Mining Opportunity ClPrecious Metals Equity21.22.7881.9-69.810.0
Salida Multi-Strategy HedgeAlternative Strategies56.070.6-66.535.887.434.3
Investors Cdn. Natural Resource-CNatural Res. Equity430.92.8565.2-49.73.73.752.311.9
Van Arbor Canadian AdvantageMiscellaneous2.0064.7-36.16.68.635.4
Front Street Canadian EnergyAlternative Strategies25.358.5-67.718.256.8
Marquest ResourceNatural Res. Equity57.3-52.365.239.011.99.8
Sprott Gold and Precious MineralsPrecious Metals Equity301.02.8454.6-49.6-16.456.216.3-18.8
Redwood Global Small CapGlob Sml/Md Cp Equity2.1853.6
Dynamic FocusPlus ResourceNatural Res. Equity295.52.3953.5-50.714.358.734.919.4
Arrow U.S. Equity IncomeAlternative Strategies28.749.5-66.2
Dynamic Power Hedge Fund-FAlternative Strategies244.02.5249.2-71.838.671.573.024.9
Front Street Special Opp Canadian-BNatural Res. Equity87.22.8248.9-46.38.022.546.819.3
Dynamic ContrarianAlternative Strategies85.82.7048.5-59.10.650.4
Front Street Growth-BCdn Sml/Md Cp Equity68.22.7347.7-53.5-1.320.747.424.3
Ark Catapult Energy Class Series ANatural Res. Equity2.745.3
Arrow Enso GlobalAlternative Strategies22.945.2-44.112.513.38.78.5
FrontierAlt Resource Capital Cl-ANatural Res. Equity4.944.6-72.7
AlphaNorth Partners Fund Inc.Alternative Strategies10.644.6-53.3
Mackenzie Univ Wld Resource ClassNatural Res. Equity99.52.4643.4-62.132.323.627.322.8
Quadrus Mac Focus Canada-D8Cdn Focused Equity0.043.4
Sentry Select Precious Metals GrwthPrecious Metals Equity212.02.6643.3-37.19.774.035.3-11.3
Renaissance China PlusGreater China Equity110.83.2043.1-37.028.651.8-3.2-5.0
Acuity All Cap 30 Canadian EquityCdn Focused Equity219.42.9141.8-57.713.626.210.121.3
Raymond James Canadian Focus PicksCdn Sml/Md Cp Equity0.96.4740.9
Mackenzie Univ Wld Prec Metal ClassPrecious Metals Equity66.02.5140.2-45.07.653.830.1-19.4
Mackenzie Univ Precious MetalsPrecious Metals Equity320.82.4239.5-46.16.649.226.8-20.5
Front Street Small Cap-ACdn Sml/Md Cp Equity0.92.5039.416.3
Standard Life India Equity Focus AMiscellaneous3.939.2
DMP Resource ClassNatural Res. Equity115.72.6738.4-57.2-5.144.340.47.5
BMO Nesbitt Burns Cdn Small Cap Index27.5-46.62.016.619.714.1
MSCI World ($ Cdn)4.5-26.1-7.120.66.67.3
S&P 500 Composite1.8-38.53.513.63.09.0
S&P/TSX Composite Index15.4-35.07.214.521.912.5
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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