June 2008 Newsletter
June 1st, 2008
CANADIAN ADVANTAGE FUND
The surge in the price of oil to over a $130 a barrel helped keep the spotlight on the Canadian dollar and commodity stocks in general. The Canadian Advantage Fund benefited as well, rising 3.5% in May. The energy, materials and technology sectors had most of the momentum last month; however, our portfolio also saw solid gains from banking and utility stocks. Over the medium term we see opportunities in non-commodity stocks offering the better long term return prospects as they have been mostly ignored as evidenced by their low valuations. We expect that our more diversified approach will lead to outperformance as economic and energy volatility favors a value style of investing over growth/momentum investing. On the earnings front, solid earnings reports out of Cameco Corp and TD Bank helped reinforce their positions as industry leaders in the uranium and banking industry.
US ADVANTAGE FUND
The US equity market saw positive gains in all sectors, except financials, with technology leading the way. Our US advantage Fund rose 2.3%, which was again better than the overall market. The equity landscape continues to be very selective as economic weakness is not spilling over to all companies. We continue to find great opportunities throughout US equities, especially in multinationals with foreign demand generating solid earnings at a reasonable price. As economic weakness in the domestic economy remains uncertain, equity selection will be even of more importance going forward. First quarter earnings was evidence of this as our holdings in technology, consumer staples and industrials all benefited from foreign demand.
EURO ADVANTAGE FUND
The Euro Zone equity market was mostly negative for the month; however, our Euro Advantage Fund ended May up 0.4% even as the fall in the Euro versus the Loonie dampened returns by 2.1%. The Euro Advantage Fund continues to perform well recently and is now up just over 10% for the last three months. Inflation in the Euro Zone showed no signs of falling as energy, food and wages continue to put pressure on prices. There are some signs that the economy is slowing and until inflation eases, interest cuts as stimulus for growth are on hold. Our Euro Fund has begun to noticeably outperform the benchmark index as economic uncertainty favors a more selective approach. Our biggest winners in May were shares of Adidas AG and utility RWE AG, rising over 10% as their earnings outlook remains attractive.
Van Arbor Asset Management is an independent Asset Management company dedicated to creating wealth using a disciplined, proprietary investment strategy with an emphasis on preserving capital while generating superior long-term returns.
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