Oil and gas energy rising

By Canadian Mutual Fund Adviser / December 19, 2013 / www.adviceforinvestors.com / Article Link

Canadian Mutual Fund Adviser, MPL Communications Inc.133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846

Among resource issues, oil and gas and energy stocks overall have held up relatively well this year. That may reflect the abundance of high-quality companies you find in this sector, as well as the positive long-term outlook for energy.

Energy stocks have been a relatively bright spot in the otherwise dismal natural resources sector this year. Materials stocks, which include gold stocks and precious metals issues, metals and mines issues, fertilizer equities, and paper and forest products equities, have declined about 30 per cent so far this year. Energy stocks such as oil and gas, by contrast, have gained nearly eight per cent, slightly underperforming the overall market.

There's a lot of appeal in the energy sector, even for more conservative-minded investors who want to invest for the long term in the sector. After all, there are a number high-quality companies such as Exxon Mobil and Chevron Corp. that operate in the sector. Then too, if the global economy is to continue to grow and the world's population to expand, then the demand for energy should rise over the long term.

Here's a way to profit from energy

Investors seeking a specialized fund that focuses on the energy sector should consider the CI SIGNATURE GLOBAL ENERGY CORPORATE CLASS FUND. Its objective is to obtain maximum long-term capital growth through investment in companies around the world that engage in the exploration, development, production and distribution of oil and gas, coal and related energy products, including geothermal, solar and other energy services. The fund may also invest in companies that supply goods and services to these companies.

To achieve these objectives, Signature Energy's portfolio adviser, Scott Vali, analyzes the global energy market and identifies securities that he believes have good growth potential relative to their current price.

Mr. Vali has been with Signature Global Asset Management since 2000. He moved into his current role of lead manager of Signature's resource funds in 2006. Under him, Signature Energy has performed relatively well these past six years. Though the fund's compound annual growth rate is just 1.4 per cent over this time, this performance is still strong enough to rank in the top quartile of all funds in the natural resources equity category. Over the six years, the fund performed in the top half of the category in four years.

The fund's 10-year record is also strong. Over this time, its annualized return is 13.0 per cent, which ranks in the top quartile. Over the decade, the fund has performed in the top half of the category in six years.

You must be able to stomach volatility

Volatility, however, is extremely high. The fund's volatility rating is 10 out of 10, making it best suited to investors who can tolerate a high level of risk, and who also have a long investment time frame. For such investors, the fund offers a well-diversified portfolio by geography. Its has 44 per cent of its assets invested in Canada, 37 per cent invested in the U.S., and seven per cent in international equities. A further 12 per cent is held in cash.

Fund performance and quartile rankings: 1-yr. - 14.4% - 1//4; 3-yr. - 4.9% - 1/4; 5-yr. - 7.5% - 2/4; 10-yr. - 13.0% - 1/4; Volatility: 10/10; MER: 2.45%; Minimum initial investment: $500; www.ci.com

Recommendation: CI Signature Global Energy is a buy for investors seeking a high-risk specialty fund with strong growth potential.

Canadian Mutual Fund Adviser, MPL Communications Inc.133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846

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