What are we looking for?
Leaders and laggards among natural resource equity funds this year.
The search
We screened natural resource equity funds for the best and worst eight performers this year until Aug. 27. U.S. dollar, segregated, pooled and duplicate versions of the funds were excluded.
What did we find?
Lots of black and red ink.
Sentry Canadian Resource Class has outpaced all other funds this year, gaining nearly 26 per cent. The fund is co-managed at Sentry Investments by Kevin MacLean who specializes in precious metals and mining, and Laura Lau, who focuses on energy equities.
The fund has been running at about 60 per cent in mining, mainly gold stocks, and the balance in energy securities. "We think the gold fundamentals are excellent, and will stay that way for a few years at least" in the absence of new gold supply, Mr. MacLean said. "The demand for gold is rising in line with the increase in debt-to-GDP in the United States. And the U.S. is piling on debt at a pretty aggressive clip."
The fund's gold mining stars include Semafo Inc., Golden Star Resources Ltd. and Osisko Mining Corp., while Bankers Petroleum Ltd. and Canacol Energy Ltd. are among the energy winners, he said. The managers pared back their energy stocks this summer as a defensive move, but have begun to redeploy their recent 11-per-cent cash position back into the market. Against a backdrop of falling oil and weak gas prices, the pair are "neutral" on the energy sector, but still see stock-picking opportunities. Ms. Lau also co-manages Sentry Energy Growth & Income, which gained 8 per cent and was also among the top eight performing funds.
Middlefield Uranium Focused Metals has been the worst performer, losing 14.5 per cent. The fund, which is mainly in uranium-related stocks, has been hurt by falling prices in the metal. Prices are trading sharply below a peak of about $136 (U.S.) a pound in mid-2007.
FrontierAlt Resource Capital Class, which lost 13.2 per cent, has had a manager change. On Aug. 1, Lightwater Capital Partners Ltd. took over from Caldwell Investment Management Ltd., which has had a tough time recovering from its 73-per-cent loss in 2008.