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December 2008 Newsletter

December 1st, 2008

CANADIAN ADVANTAGE FUND

Another volatile month in financial markets kept the Canadian Fund in negative territory; however, for the first time in awhile we saw positive developments ranging from government stimulus and liquidity injections to a bottom forming process occurring in equities and commodities. In general, every sector in November was weak with financials and energy shares leading the way down. The rapid decline that we have seen over the last three months has been disconcerting, as financial deleveraging and fear have prevented any sustainable rally. Given the positive developments from coordinated government spending and liquidity injections, we are beginning to see some level of stability work its way through the equity market. Patience will be rewarded with markets trading at undervalued levels unseen in the last ten years. Most of our holdings are trading at very attractive valuations, which suggest long term returns from these levels are an opportunity within a reasonable time frame.

WORLD ADVANTAGE FUND

The World Fund fared relatively well considering the 5.1% fall in the MSCI World Index and 7.5% fall in the S&P; 500 Index. The Fund continues to hold its value in a tough market, outperforming the MSCI World Index by 19% since its inception in June. A focused portfolio in relatively defensive sectors such as Health Care and Consumer Staples has helped the Fund manage the financial storm of the last few months. Going forward we continue to see our holdings as leaders in the current environment and thus should continue to outperform the overall equity market. Relative to the Canadian market, the World Fund has less of a commodity focus and actually benefits from a weakening Canadian Dollar. Some of the winners last month were AT&T; and McDonald’s, which both have clear earnings visibility and in McDonald’s case are actually raising their earnings outlook.

US ADVANTAGE FUND

November was the last month of the US Fund, initially launched in May of 2004. The US Fund, as a regional Fund, closed on a vote by Unitholders on November 22nd. Although the US Fund ended in negative territory, we take some hint of success by beating the S&P; 500 Index by 10% since inception and almost by 20% this year alone. We hope to continue that success and expertise in US equities as part of the broader World Fund.

EURO ADVANTAGE FUND

November was also the last month of the Euro Fund, which was initially created in August of 2005. The Euro Fund, as a regional Fund, closed on a vote by Unitholders on November 22nd. The Fund itself fared relatively well since inception, outperforming the S&P; Euro Index by 6% since inception and by over 10% this year alone. Europe remains a very attractive place to invest given its success of having a strong European Union as well as its drive to be a key regional hub to capitalize on growth in Asia, Eastern Europe and the Middle East. We look forward to transferring our expertise in Euro equities to the World Fund which can invest in Europe as part of its mandate.

Van Arbor Asset Management is an 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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