What are we looking for?
How equity funds that invest in natural resources are holding up this year.
Commodity stocks have taken a hit on worries about slower global growth.
But the sector has recently been given a new lease on life as a fresh wave of central bank stimulus has sent some investors looking for hard assets because of fears that money-printing will trigger inflation and debase currencies.
We looked for the leaders and laggards among resource funds for this year to Sept. 27. U.S. dollar, segregated and duplicate versions of funds were excluded.
What did we find?
Takeovers in Canada's energy patch are helping to fuel returns among the leaders.
Trimark Resources emerged at the top of the heap, gaining 6.9 per cent, while its sibling fund, Trimark Energy, rose 2.5 per cent. Their performance contrasts with the double-digit losses by the laggards.
Both Trimark funds gained traction from owning stocks such as Progress Energy Resources Corp., which was acquired by Malaysia's state oil company Petronas.
They also held Nexen Inc., which agreed to a proposed takeover by China's CNOOC Ltd. "It's a stock picker's market, and that's what I love about this type of environment," said the funds' manager Norman MacDonald of Invesco Ltd. "It's not a raging bull market where all boats get lifted with the tide."
Mr. MacDonald said his funds' companies often get taken out when commodity prices weaken because he sticks with quality companies with strong management teams. Progress Energy was acquired with a hefty premium even though the price of natural gas has been depressed, but the buyer saw it as an opportunity, he said. "You have to be counter-cyclical in the materials space."
After selling both energy stocks once the deals were announced, he took the cash to go bargain hunting. During the summer, he snapped up names such as Celtic Exploration, Turquoise Hill Resources (formerly Ivanhoe Mines) and First Quantum.
But it wasn't just the mergers that helped out Trimark Resources. That fund also had a "big win" with wood panel maker Norbord Inc., he said. "It rose because of the rebound in the U.S. housing market."
STARS AND DOGS AMONG NATURAL RESOURCE EQUITY FUNDS FROM JAN. 1 TO SEPT. 27
|Fund||MER||Assets (in $ mil.)||YTD (Jan. 1-Sep. 27)||Period (Aug. 1-Sep. 27)||2011%||2010%||2009%||2008%||1 yr. to Aug. 31/12||3 yrs. to Aug. 31/2012|
|Bissett Energy Corporate Class-A||2.55||48.1||3.58%||8.31%||7.01||50.07||57.40||-44.49||-4.80%||27.73%|
|Trimark Energy Class||2.64||3.5||2.50%||2.88%||-8.90%|
|BMO S&P/TSX EW Oil & Gas Indx ETF||0.62||38.4||1.86%||4.15%||-7.16||11.26||-0.99%|
|BMO Global Energy Class||2.62||14.4||0.98%||3.27%||-0.09||13.85||40.65||-0.29%||9.10%|
|Mackenzie Univ World Resource Cl.||2.58||98.3||0.98%||5.72%||-21.05||19.92||65.81||-62.09||-15.17%||2.85%|
|BMO Gdn. Globl Engy Cl. Advisor Ser.||2.63||0.5||0.97%||3.33%||-0.08||13.84||40.59||-0.38%||9.08%|
|FrontierAlt Resource Capital Cl-A||5.20||1.2||-29.31%||-0.24%||-46.38||25.50||70.82||-72.70||-45.85%||-17.77%|
|Qwest Energy Canadian Resource Cl A||4.36||16.4||-25.58%||0.88%||-42.00||22.54||15.28||-40.37||-46.68%||-13.41%|
|Front Street Growth Class Series A||6.33||10.3||-24.98%||5.47%||-27.86||42.47||111.78||16.28||-35.18%||-2.07%|
|Redwood Energy Growth Class - A||4.81||3.8||-22.84%||5.03%||-2.39||16.14||93.10||-25.03%||4.48%|
|Redwood Energy Income Class - A||5.23||1.9||-18.75%||6.19%||-21.81||26.79||74.10||-27.65%||3.17%|
|NexGen Global Resource Reg||2.75||2.1||-18.60%||9.15%||-34.26||70.21||57.05||-38.21%||3.86%|
|Matrix Canadian Resource||2.58||2.3||-18.55%||6.91%||-40.58||37.40||198.06||-67.09||-37.47%||-5.27%|
|S&P/TSX Total Return||5.52%||6.30%||-8.71||17.61||35.06||-33.00||-3.60%||6.10%|
|S&P 500 Composit Totl Retrn Idx ($Cdn)||12.85%||3.10%||4.42||9.35||8.08||-21.92||18.94%||9.68%|
|Source: Lipper, Bloomberg|
© 2007 The Globe and Mail. All rights reserved.
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