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September 2010 Newsletter

September 2nd, 2010

CANADIAN ADVANTAGE FUND
The Canadian Fund ended the summer where it started, holding its value even as markets were a bit volatile. The TSX Index edged up 1.7% in August with most of the gains coming from gold producers as well as Potash Corp, which is being targeted as an acquisition by BHP Billiton. Markets continue to remain lumpy, as economic concerns are putting pressure on more cyclically inclined stocks, while less cyclical companies are beginning to see a bit of a renaissance. To date, this year has been spent mostly balancing last years gains with the search for new opportunities. Our focus remains on companies in the telecommunications, utilities, and consumer staple sectors, which offer slower stable returns and are less risky. Our two best performers in August were BCE (+6.1%) and Rogers (+3.5%), both of which are seeing stable earnings growth.

WORLD ADVANTAGE FUND
The World Fund had a solid month in August, rising 4.1%, bringing our year to date gain to 5.4% even though the MSCI World Index remains down for the year. The Fund is becoming less dependent on the performance of the broader market as we are focused on more selective areas of the market. Last month’s gains came mainly from our positions in global utility companies whose stable earnings and nice dividend yields are becoming very attractive in the current low inflation environment. Foreign currencies are also helping boost returns, but more importantly act like a great hedge against any market downturn which usually leads to foreign currency priced assets rising. Our best performers in August were telecom company AT&T (+4.2%), electric utilities Ameren (+10.6%) in the US and Hokuriku Electric (+5.1%) in Japan.

Van Arbor Asset Management is dedicated to creating wealth using a disciplined, value based investment strategy with an emphasis on preserving capital while generating superior long-term returns.
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