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April 2005 Newsletter
Friday, April 01, 2005
"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today."
-Dr. Laurence J. Peter
CANADIAN ADVANTAGE FUND
NAV: $ 12.93
YEAR TO DATE: 6.59 %
MONTH CHANGE: - 1.75%
The Van Arbor Canadian Advantage Fund finished the first quarter of 2005 on a positive note. The Fund retracted 1.75% for the month of March, as the overall markets cooled down in the month largely caused by weaker commodity and energy prices. At month's end, the Fund reported a 29.3% gain since inception and a 6.59% gain year to date, compared to the S&P/TSX which posted a 0.80% loss for the month, a 3.7% gain year to date and a 17.2% gain since May 2004. In economics news, the Bank of Canada may be raising key interest rates on worries that the recent strengthening of the Canadian dollar may interfere with the competitiveness of the manufacturing and exporting sectors of the economy. The top Fund performer this past month was SNC Lavalin Group Inc (SNC:TSX), a provider of engineering, project management and project financing services in the power, industrial, transport and other sectors. After being awarded a number of new contracts in United Arab Emirates and Russia, shares of SNC responded by appreciating 13% this month. The energy sector of the portfolio, including oil and gas, was under pressure this month dragging the overall performance of the fund. Shares of Talisman Energy (TLM:TSX) and Suncor Energy Inc (SU:TSX), were down 2% and 3%, as investors decided to exercise some profit taking and capitalize on the 65% and 40% appreciation of the two stocks over the trailing twelve months. Two transactions were executed this month. Shares of Russel Metals (RUS:TSX) and CHC Helicopter (FLY/SV:TSX) were sold and proceeds were used to purchase shares of Royal Bank (RY:TSX) and Home Capital Group Inc (HCG:TSX).
US ADVANTAGE FUND
NAV: $ 11.65
YEAR TO DATE: 1.02%
MONTH CHANGE: -3.93%
The performance of the Van Arbor US Advantage Fund was fairly in line with the performance of the broader markets this month. For the first quarter of 2005, the Fund's performance remained flat at 1.02%. Over the month of March, the Fund delivered a -3.93% return, and since its inception the Fund generated a 16.5% return. The US equity markets, as represented by the broad S&P 500 Index, reported a loss for the month of 2.5%. The S&P Index also reported a loss for the year to date of 2.6% and a positive return of 9.2% since the Fund's inception. In US economics news, the latest fears of inflation and consumer confidence were addressed late in the month. While the Bank of Canada is talking about rate hikes, the U.S. Federal Reserve Bank pushed its overnight lending rate above the Canadian equivalent for the first time in four years. Still fears of a slowdown are not quite evident as U.S. economic growth is forecast to outpace that of many other major economies in 2005, further supported by the latest fourth quarter GDP growth of 3.8%, a number that proved encouraging to many economists and the markets in general. In addition, while consumer confidence has dropped since last month, the confidence index remains well above its level from March 2004. The top performers in the Fund for the past month were food and beverage providers. Shares of Sysco Corp (SYY:NYSE) and Brown-Forman Corp (BF/A:NYSE) were up 3% and 1.5% respectively. Providers and manufacturers of healthcare related products such as UnitedHealth Group (UNH:NYSE) and CR Bard ( BCR:NYSE) resisted the market's negative sentiment and concluded the month flat. The under-performing oil and gas sector had a negative effect on the portfolio returns for the month as the energy related firms, on average, lost approximately 3% in value. The only transactions was the sale of Alberto Culver's and a purchase of Praxair Inc (PX:NYSE), a supplier of atmospheric gasses to industries primarily located in North and South America.
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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