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June 2009 Newsletter

June 1st, 2009

CANADIAN ADVANTAGE FUND

The Canadian Fund had its third strong month in a row, rising 18.1%, while the TSX rose 11.2%. The Canadian Fund is now up 65% so far this year, while the TSX is up 15% year to date. Even with those strong returns, we continue to see excellent value opportunities created from last year’s panic that drove stocks to unwarranted levels. As confidence continues to increase, we are not only seeing a greater appetite for quality stocks, but also valuations are starting to creep back to historic norms from a severely undervalued state. Valuations aside, the economic front is also improving as stabilization in financial markets is helping the economy recover from its worst recession in decades. Along with those early signs of recovery, we are seeing leadership emerge in early cyclical sectors like materials and energy, which coincidentally were the biggest gainers last month. Oil is now comfortably in the $60 range, but remains we below its $147 peak last year. Some of our big winners in May were Talisman Energy (18%), Sino-Forest (22%), and Major Drilling International (28%).

WORLD ADVANTAGE FUND

The World Fund followed through with another great month, rising 8.4%, while the MSCI World Index ($C) fell -0.3%. A few interesting statistics on this one year anniversary of the Fund: the World Fund has beaten the market every month since inception, leading to a one year return of 25% versus a loss of 29% for the World Index. In terms of May, much of the loss on the World Index was attributed to the soaring appreciation of the Canadian dollar, which rose 8%, reducing the value of foreign securities. The World Fund managed to avoid much of the currency effect by holding a diversified basket of companies in different currencies and at the same time not overly concentrating on the US economy and US stocks. We currently like commodity producing countries like Australia and Norway, which are seeing improvements in their economies as commodities continue to perform well due to improving demand from Asia and investor’s appetite for an inflation hedge. May’s big winners were infrastructure company Fluor (24%), miner Anglo American (19%), and oil driller Noble (25%).

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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