WHAT ARE WE LOOKING FOR?
Leaders and laggards over the past year.
Navigating through the market volatility has been a true test of investment skills for fund managers. Stock markets began their collapse last fall, but some relief has come from a spectacular rally since their March lows.
We screened to find the best- and worst-performing funds for the year ended July 31. Segregated, pooled, duplicated and U.S.-dollar funds were excluded. We also left out the Horizons BetaPro leveraged exchange-traded funds (ETFs) because they would likely dominate both lists.
WHAT DID WE FIND?
A mixed bag of funds with the top leaders boasting around a 47-per-cent gain, while many of the laggards turned out to be energy-focused investments.
The top two leaders outperformed, partly through shorting strategies, although only one is a hedge fund. Creststreet Alternative Energy, a $51-million mutual fund, has regulatory approval to do limited short selling, and has taken full advantage of this tool. It is currently shorting the U.S. market through ETFs.
While the fund had 80 per cent in cash at the end of 2008, that's now down to 40 per cent. "The fund's small size has allowed us to manoeuvre around the market quite freely," manager Steve Martin says.
While he believes the markets have "more legs" for a couple of months, he is cautious on the medium- to long-term prospects for economic growth and thus upside potential for stocks.
The return of the Creststreet fund was tied with Silvercreek Capital LP, a $5-million special-situations hedge fund run by Louise Morwick. From July to November, 2008, this fund focused on shorting U.S. stocks, but many of these positions were unwound to be redeployed into U.S. corporate bonds, says Bryn Joynt, chief financial officer of Silvercreek Management Inc.
"In the last four to six weeks, it's been a little bit more balanced. We still have about 50 per cent in long credit [bonds] and another 50 per cent in long-short equity exposure."
Most of the equity portion is in shorting U.S. stocks in areas like consumer discretionary and technology names, while the long positions are in areas like resource and agricultural stocks, he says.
Among the laggards, many are smaller-capitalization, energy-focused investments that are sitting in red ink because of the collapse in commodity prices. DeltaOne Strategic Energy and Claymore Natural Gas Commodity ETF, respectively, have lost 83.4 and 72 per cent.
While the price of oil plunged to about $32 (U.S.) a barrel from a peak of $147 last July, it has rebounded to around the $70 level recently. Natural gas prices, however, remain in a deep funk.
|Leaders and laggards for the year ended July 31, by 1-yr return|
|(As of July 31/09)||Latest||(July 31)||% returns (as of July 31, 2009)|
|Fund name||Category Assets ($-mil)||MER||YTD % rtn||1-yr||3-yr||5-yr||10-yr||15-yr|
|Creststreet Alternative Energy||Miscellaneous||12.6||47.5|
|Silvercreek Capital LP||Alternative Strategies||51.5||47.3|
|Quadrus Mac Mxm Dividend-D5||Cdn Div & Incm Equity||0.0||2.36||41.0||41.0|
|Van Arbor World Advantage-F||Miscellaneous||39.9||39.2|
|Renaissance China Plus||Greater China Equity||166.5||3.20||60.5||36.6||20.8||16.0||16.0|
|PH&N Absolute Return||Alternative Strategies||1.42||32.1||35.5||21.6||16.7|
|Van Arbor Canadian Advantage||Cdn Equity||2.00||86.6||31.5||10.9||16.4|
|Front Street Small Cap-A||Cdn Sml/Md Cap Equity||2.3||2.50||56.0||31.3|
|MBS Adjustable Rate Income II||Cdn Income Trust Equity||31.0||28.5||-1.8|
|Quadrus London Capital Cdn Div-D5||Cdn Div & Incm Equity||0.1||2.35||12.4||25.5|
|Friedberg Foreign Bond||Miscellaneous||17.5||0.93||-2.2||24.5||7.5||6.8||7.7|
|CI Global Opportunities*||Alternative Strategies||23.1||2.64||-1.2||23.1||40.3||24.7||12.0|
|Quadrus Mac Mxm Cdn Eq Growth-D8||Cdn Focused Equity||0.0||2.35||22.6||22.6|
|CI Trident Global Opportunities||Alternative Strategies||257.6||2.48||-0.9||19.5||37.3||23.1|
|Magna Life Settlement||High Yield Fixed Income||5.0||19.1|
|DeltaOne Strategic Energy||Alternative Strategies||-41.7||-83.4||-52.5||-25.6|
|Lawrence Partners||Alternative Strategies||1.75||11.2||-76.0||-33.0|
|Claymore Natural Gas Commodity ETF||Miscellaneous||147.1||-58.6||-72.0|
|Creststreet Resource||Natural Resources Equity||3.44||17.3||-68.3||-28.0||-11.4|
|Resolute Performance||Cdn Sml/Md Cap Equity||334.2||2.94||15.9||-63.9||-14.7|
|Axis Investment Funds Inc. Ser. I||Retail Venture Capital||3.0||6.78||-23.0||-60.6||-39.7||-27.6|
|Mavrix Canadian Growth||Cdn Sml/Md Cap Equity||1.6||3.25||-5.9||-59.7||-29.2||-14.7||-20.9||-10.9|
|Mavrix Multi Series Canadian Growth||Cdn Sml/Md Cap Equity||0.2||2.29||-4.9||-59.6|
|Sprott Energy||Natural Resources Equity||86.0||2.85||30.6||-59.5||-16.2||2.5|
|FrontierAlt Resource Capital Cl-A||Natural Resources Equity||4.7||38.9||-56.6|
|Landry Morin Small Cap momentum-F||Cdn Sml/Md Cap Equity||1.95||8.8||-55.1||-22.5||-5.5|
|EnerVest Natural Resources Fund Ltd||Natural Resources Equity||21.0||2.95||16.2||-54.1||-25.8||-6.0|
|Ark Aston Hill Energy Class||Natural Resources Equity||6.0||17.7||-54.1|
|ESI Premium Portfolio||Alternative Strategies||-57.9||-53.5|
|Creststreet Energy Opportunities||Alternative Strategies||24.3||-53.5||-2.7|
|MSCI World ($ Cdn)||2.1||-17.0||-6.6||-1.3||-2.8||3.9|
|S&P 500 Composite ($ Cdn)||-3.7||-18.0||-9.6||-6.2||-6.1||3.5|
|S&P/TSX Composite Index||20.0||-20.6||-3.0||5.0||4.3||6.5|
|S&P/TSX Total Return||22.5||-17.7||-0.2||7.7||6.5||8.7|
|*Closed to new investors Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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