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QikReview: Top Specialty-Natural Resources Mutual Funds

2008-07-18T00:13:00.000-04:00

Below is a brief review of three Specialty-Natural Resources mutual funds.

T. Rowe Price New Era (PRNEX)

Category: Specialty-Natural Resources
Rating: 4
Capital Gains Exposure: 45%
Assets: $6.2 bil
Expense Ratio: 0.66%
Turnover Ratio: 16%
Yield: 0.93%
Redemption Period: 0 days
Redemption Fee: 0.0%
3-Year Total Cost: $211
Minimum Investment: $3,000
Comments: Although absolute returns are solid (31% 5-year returns and 15% 10-year returns), relatively speaking this fund is in the middle of the pack as it ranks a measly #50 among peers in 10-year returns and #55 in 5-year returns. Volatility seems to be relatively low. This Large-cap Growth fund invests into Giant (34), Large (39), and Medium (24) companies. Has 6% in Cash and 30% fo total assets in Foreign Stocks. Invests in Industrials (24) and Energy (66) sectors. Specifically, it invests into Oil & Gas (28), Oil & Gas Services (31), Utilities (6), Misc. Industrials (10). It has a large number of holdings, 106, and a low-level of concentration into particular stocks (only 28% of assets in the Top 10 holdings), but turnover ratio is tiny at 16%. I recognize most of the companies on their top 25 holdings list. I think this is a solid fund with a diversified focus that I'll keep an eye on, but ignore for the time being because of the run-up of prices in the energy and natural resources companies.

Excelsior Energy & Natural Resources (UMESX)

Category: Specialty-Natural Resources
Rating: 4
Capital Gains Exposure: 10%
Assets: $0.7 bil
Expense Ratio: 1.12%
Turnover Ratio: 279%
Yield: 0.10%
Redemption Period: 30 days
Redemption Fee: 2.0%
3-Year Total Cost: $359
Minimum Investment: $2,500
Comments: Middle-of-the-pack performance with a significant volatility. Even though absolute returns are respectable, relative to its peers it's fairly average. This Large-cap Growth fund invests into Giant (20), Large (43), Medium (26), and Small (9) companies. It invests into Industrials (23) and Energy (73). More specifically: Oil & Gas (51), Oil & Gas Services (25), and Hard Commodities (6). It has 3.3% of assets in Cash. It has a reasonable number of holdings at 55, but a very high turnover ratio of 279%. It's probably a decent choice as far as energy/mining funds go, but I wouldn't touch it at this point.

U.S. Global Investor (PSPFX)

Category: Specialty-Natural Resources
Rating: 4
Capital Gains Exposure: 14%
Assets: $1.5 bil
Expense Ratio: 0.94%
Turnover Ratio: 122%
Yield: 5.17%
Redemption Period: 30 days
Redemption Fee: 0.3%
3-Year Total Cost: $316
Minimum Investment: $5,000
Comments: One of the best funds in its category by returns: it's #1 in 5-year returns, #13 in 10-year returns, and #11 in 3-year returns. It is definitely a cyclical fund as it was pretty much non-performing from 1998 until it roared back in 2003 and has been making amazing returns until now. So, for five years it was useless and for another 5 years it was stunning. I'm not sure how many more years it can yank out great returns, but I would think it's closer to the end of the booming cycle than the beginning. This is a Large-cap Growth fund that invests into the Industrial Materials/Energy sectors: Oil & Gas (29), Oil/Gas Productions (4), Oil & Gas Services (33), Utilities (4), Hard Commodities (19), and Misc Industries (3). It has 5% in Cash. It invests into Giant (26), Large (24), Medium (35) and Small (12) companies. 55% of assets are in the Foreign Stocks. It has 190 holdings, 122% turnover ratio, and only 26% of assets in the Top 10 holdings. I think this fund has too many holdings and is toward the end of its cycle. So, even though it's good fund to keep in mind in the future, at this time I will most certainly pass on it although it may very well post solid returns in 2008.

QikReview: Top Specialty-Precious Metals Mutual Funds

2008-07-17T10:31:00.000-04:00

Below is a brief review of three Specialty-Precious Metals mutual funds.

USAA Precious Metals (USAGX)

Category: Specialty-Precious Metals
Rating: 4
Capital Gains Exposure: 50%
Assets: $1.1 bil
Expense Ratio: 1.21%
Turnover Ratio: 29%
Yield: 1.56%
Redemption Period: 0 days
Redemption Fee: 0.0%
3-Year Total Cost: $384
Minimum Investment: $3,000
Comments: This fund's returns are nothing short of outstanding: it ranks #1 in 10-year returns and in the top 10 for 3-year and 5-year returns; although it is only #35 in 1-year returns. Absolute returns though is what really caught my attention: 23% annually over 10 years, 34% over 5 years, 41% over 3 years, and 33% over 1 year! Volatility is certainly present though: it lost 11% in 2004 and I'm sure it wasn't so hot when the gold prices weren't plowing through the roof in other decades. This is a Mid-cap Growth fund that invests into Giant (5), Large (53), Medium (30), and Small (12) companies. It holds 5% in Cash and the rest in Stocks, with 80% of assets in Foreign Stocks. Its exposure is in Canda (51), the U.S. (15), South Africa (10), Australia (9), Peru (5), and Asia ex-Japan (11). With 46 holdings this fund is relatively concentrated. Turnover is also relatively low at 29%. It has 57% of assets in the Top 10 holdings. This is a good specialty fund, but it's definitely speculative. One of the key components for a success of such funds is a weak dollar. As the Fed will be forced to raise the rates back at the end of 2008 / beginning of 2009, dollar may strengthen. Also, this fund in particular, and gold in general, has been having too much fun lately, and I expect it to end or at least tamper off in 2008/2009.

U.S. Global Investor (UNWPX)

Category: Specialty-Precious Metals
Rating: 3
Capital Gains Exposure: 24%
Assets: $1.0 bil
Expense Ratio: 0.99%
Turnover Ratio: 54%
Yield: 10.51%
Redemption Period: 30 days
Redemption Fee: 0.5%
3-Year Total Cost: $332
Minimum Investment: $5,000
Comments: This fund is #1 among peers in the 5-year returns at 40%, but it is a horrible #68 in 10-year returns. It is very volatile, altough does perform very well when the market does well.
This Small-cap Growth fund invests into Large (12), Medium (45), Small (29), and Micro (15) companies. It invests into Industrial Materials (97). It has 6% in Cash. It has exposure in Canada (63), the U.S. (8), the U.K. (7), South Africa (3), and Australia (2). It has a very large number of holdings, 234, and reasonable turnover ratio of 54%. Fund's 36% of assets are in the top 10 holdings, which is not concentrated. This funds focus on small-cap stocks in the precious metals sector seems very risky in general and at this time in particular.

DWS Gold & Precious (SCGDX)

Category: Specialty-Precious Metals
Rating: 3
Capital Gains Exposure: 24%
Assets: $0.8 bil
Expense Ratio: 1.26%
Turnover Ratio: 52%
Yield: 3.51%
Redemption Period: 15 days
Redemption Fee: 2.0%
3-Year Total Cost: $397
Minimum Investment: $2,500
Comments: Middle-of-the-pack performance with high volatility. Although, arguably, rewards provided by this fund justify the volatility, I don't think so. This Mid-Growth fund invests into Giant (14), Large (38), Medium (31), and Small (17) companies. It has exposure in Canada (31), Australia (14), South Africa 913), the U.K. (6), and the U.S. (4). It has zero in Cash. It has a modest number of holdings - 43, and reasonable turnover ratio of 52%. This fund is a tier-2, in my opinion. Although, worth considering for various portfolio allocation models.

QikReview: Top Other Foreign Mutual Funds

2008-07-15T15:20:00.000-04:00

Below is a brief review of the three other foreign-oriented mutual funds (World Stock, Latin America, and Diversified Emerging markets).

Polaris Global Value (PGVFX)

Category: World Stock
Rating: 3
Capital Gains Exposure: 5%
Assets: $0.5 bil
Expense Ratio: 1.23%
Turnover Ratio: 5%
Yield: 1.46%
Redemption Period: 180 days
Redemption Fee: 1.0%
3-Year Total Cost: $390
Minimum Investment: $2,500
Comments: Middle-of-the-pack returns, which are great in absolute terms, but not so great relative to its peers. Capital gains exposure is negligible at 5%. It invests into Mid-cap Value companies. It holds no Cash. It invests into Financials (24), Consumer Goods (9), Industrial Materials (34), and Business Services (10). It's in the U.S. (33), Japan (14), Finland (7), Ireland (6), South Africa (6), and the rest of Asia (6). This fund has performed terribly in 2007 in absolute terms and relative to its peers (it lost about 4% while most peers gained in double digits). I don't think I like this fund's style too much.

T. Rowe Price Latin (PRLAX)

Category: Latin America
Rating: 4
Capital Gains Exposure: 51%
Assets: $3.3 bil
Expense Ratio: 1.24%
Turnover Ratio: 35%
Yield: 0.77%
Redemption Period: 90 days
Redemption Fee: 2.0%
3-Year Total Cost: $393
Minimum Investment: $2,500
Comments: It's #1 in 10-yr, 3-yr returns, and #8 in 5-year returns. Absolute returns are just unbelievable. Invests in Large-cap Growth; Telecom (10), Consumer Services (12), Financials (22), Industrial Materials (23), Energy (21). Geographically, it's in Brazil (67), Mexico (24), and Chile (3.5). It has 46 holdings with 65% of assets int Top 10 holdings. It's largest positions are in the two companies that I've actually heard of: Petroleo Brasileiro, which recently discovered a huge oil field, and America Movil, which is the top wireless operator in Mexico and is controlled by the world's second wealthiest man, Carlos Slim. It has only 1.4% in Cash. This fund has provided investors with exceptional returns during the past 5 years, the music has to stop at some point and I don't want to be a part of the Latin America sell-off, which tends to be prolonged from what I hear. As much as I'd like to have exposure to countries such as Brazil and Mexico, right now simply may not be the best time to do so with valuations soaring and global boom has become questionable.

T. Rowe Price Emerging (PRMSX)

Category: Diversifed Emerging Markets
Rating: 3
Capital Gains Exposure: 33%
Assets: $4.3 bil
Expense Ratio: 1.25%
Turnover Ratio: 44%
Yield: 0.74%
Redemption Period: 90 days
Redemption Fee: 2.0%
3-Year Total Cost: $400
Minimum Investment: $2,500
Comments: This fund has produced respectable returns and is in the top 20 among peers for 1-, 3-, 5-, and 10-year total returns. This fund moves with its category and doesn't do very well in the bear markets. It may lose somewhat less than some of its peers, but it will still lose and last time it stayed negative for 3 years after the market drop. This Large-cap Growth funds invests into Giant (30), Large (45), and Medium (24) companies. It invests into Telecom (6), Consumer Services (9), Business Services (8), Financials (36), Consumer Goods (7), Industrials (20), and Energy (8). It has exposure in Brazil (14), China (12), South Korea (11), India (10) Taiwan (8). This fund has a large number of holdings, 134, and reasonable annual turnover ratio of 44%. This fund makes for an interesting choice in the global bull market, but at this time I deem it too risky.