In hindsight, it would have been pretty tough to find a worse time to launch an energy fund.
Launched back in March 2014, oil was trading north of $100 per barrel. Investor demand was strong, and all looked good. The fund was doing okay, keeping pace with its peers. Then in June, the oil market started its free fall, taking this fund down with it.
In the past year, it has lost 61%, losing 21.3% in the last six months, with nearly half of that loss coming in June. It has underperformed the benchmark and has lagged its peers and is the worst performing energy fund in the country over the past one, three, and six month period, and also over the past year.
Management had tried to stop the bleeding by raising cash, but it was too little too late. At the end of May, two thirds of the fund had been in cash. Over the course of June, the managers started putting some of that cash to work, adding to current holdings including Whitecap Resources, Peyto Exploration, and Gibson Energy. They also took on some new positions including Anadarko Petroleum, Calfrac Well Services, and Tusla based energy explorer, Helmerich & Payne Inc. The June 30 cash balance was reported at 47% of the fund.
In addition to the dismal performance, high costs are another knock on this fund. With a pretty standard management fee of 2%, the MER for the fund is listed at 8.29%, meaning there are significant operating expenses in the fund, largely the result of its small size. The assets in the fund are listed at $860,000. Add to that trading costs of more than 1%, and it’s not hard to see why this fund is struggling.
With that backdrop, I would likely look elsewhere for my energy exposure, with Canoe Energy Income, Canoe Energy Class, or Franklin Bissett Energy being stronger candidates than this offering.