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Mutual Fund News

Picture brightens for venture capital funds

What are we looking for?

Investment funds with momentum.

The search

We screened for the top 15 gainers in the first half of the year. U.S. dollar, pooled, segregated, alternative strategy, exchanged-traded and duplicate versions of funds were excluded.

What did we find?

Better times for some retail venture capital [labour sponsored] investment funds.

These funds, which invest mostly in private companies, have faced a tough time harvesting gains as the initial public offering market dried up and merger activity slowed in recent years.

VenGrowth Investment Fund, however, rose to the top with a 38.9-per-cent return. Redemptions in the fund were suspended in late 2008, and investors get an annual payout as investments are sold.

The robust gain this year stemmed from raising the valuation of an investment following a "private exchange of shares between two shareholders of one of our investee companies," said Wesley Ollson, a spokesman for VenGrowth Asset Management Inc. He would not reveal the firm's name.

BEST Discoveries' Class A version rose 26.1 per cent because of gains from high-yielding debentures and updating the valuation of equity investments in the fund, said John Richardson, president of BEST Investment Counsel Ltd. This new fund, which has suspended redemptions until July, 2012, was created after a restructuring of the original fund when it suffered liquidity problems. Other investors own a new Class L version listed on the Canadian National Stock Exchange.

GrowthWorks Commercialization 580 rose 17.5 per cent after selling stakes in Toronto-based Bump Technologies Inc., which was bought by Google Inc., and Sysomos Inc., a social media analytics firm bought by MarketWire Inc.

Technology firms flush with cash have been looking to buy smaller firms this year after deciding the economy was not going back into a double-dip recession, said David Levi, chief executive officer of GrowthWorks Ltd. "We are getting better valuations than a couple of years ago."

Top performers among mutual and retail venture capital funds for the six months to June 30
Name Category Assets(millions) LatestMER YTD(%) 2009(%) 2008(%) 2007(%) 2006(%)
VenGrowth Invst Fund Cl A SrERetail Venture Capital41.14.1738.9-32.1-37.0-9.66.1
Sentry Select Prec. Metals GrwthPrec. Metals Equity504.62.7529.585.4-37.19.774.0
BEST Discoveries Cl A Sr IRetail Venture Capital10.126.1
Sentry Select Mining Opport. ClPrec. Metals Equity43.32.8823.0145.6-69.810.0
Dynamic Precious MetalsPrec. Metals Equity811.62.7522.860.9-27.65.662.7
Chou BondHigh Yield Fixed Income60.91.3921.742.5-37.7-2.722.0
Bissett Microcap-FCdn. Small or Mid Cap Equity49.22.3820.557.3-48.4-3.521.8
Sentry Select Cdn Res. ClassNatural Res. Equity212.62.8118.962.8-51.6-2.28.7
Caldwell Meisels CanadaCdn. Sml or Mid Cap Equity3.42.7518.721.2-55.97.449.9
Chou RRSPCdn. Focused Sml/Mid Cap Equity128.21.7718.727.8-42.4-9.29.6
Middlefield Prec. Metals ClassPrec. Metals Equity1.62.3018.133.8
GrowthWorks Comm. 508Retail Venture Capital3.417.5-0.7-1.6
Dynamic Strategic Gold ClassPrec. Metals Equity131.917.1
Sprott Gold Bullion Fd-APrecious Metals Equity138.013.9
Front St. Energy Gwth Fund Ser-IRetail Venture Capital7.1913.48.8-41.3-13.57.9
S&P/TSX Total Return-2.535.1-33.09.817.3
S&P 500 composite ($ Cdn)-6.35.5-23.8-12.213.6
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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