To be honest, I’m not sure I’m ready to be putting any money in an energy fund at the moment. I’d like to see a bit more firming around the oil price before I dive in. However, if you’re ready to make that move and are looking for a good option in the space, the Canoe Energy Fund would likely be my pick.
Manager, Ravi Tahmazian uses a macro analysis to find the subsectors in the energy space that he believes are well positioned for the expected environment. He focuses not only on oil and gas, but also pipelines, renewables, and energy service companies. He looks for companies where management has their interests aligned with the investors. He analyzes the quality of the business, its balance sheet and properties.
The manager is not afraid to move into cash when he feels there are no suitable investment opportunities, or the sector is poised for a fall.
At the end of January, it held approximately 40% in cash, and just under 30 names, with the top ten making up 36% of the fund. The process is very active, with high levels of turnover. The fund is small, which allows the manager the flexibility to take meaningful positions in some of the smaller names in the industry. If we see a big inflow into the fund, he may be forced to move to more medium and large cap names, which will more than likely effect performance.
I like the manager. He has a lot of experience in the industry, and has done a stellar job with this fund since he took it over. He has managed to outpace many of his rivals, and do so with much less volatility and stronger downside protection.
It’s pretty much all Canadian focused, which given the manager’s background is a good thing. I also like that while he doesn’t play an active role with the fund, manager Rob Taylor is at Canoe. This is a big positive for me, given Mr. Taylor’s success at BMO running their global energy mandate. Should anything happen to Mr. Tahmazian, Mr. Taylor could step in and manage the fund without missing a beat.
The only other fund that compares to this on a quantitative basis would be the BMO Global Energy Fund. But since Rob Taylor left the fund a couple of years ago, I’m not considering it until I see a solid three years with the new management team.