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Market Beating Performance Helped This Market Neutral Fund Grow Assets
Low correlation to traditional asset classes has always been one of the appealing features of alternative investments, but with the S&P 500 Index posting double-digit successive gains of 15.9%, 32.2%, and 13.6% from 2012 through 2014, low correlation hurt more alternatives than it helped. Even in 2015, a year marked by out-sized volatility, the S&P managed to eke out a modest gain of 1.36%, while most alternative categories posted losses in the aggregate. But not the LMCG Global Market Neutral Fund (MUTF: GMNIX ). Its annual gains of 4.82% in 2015 smashed the S&P 500’s returns and beat Morningstar’s Market Neutral category average by 507 basis points, and those returns followed a solid 9.99% return in 2014. Top Performance in 2015 This solid performance no doubt helped the fund attract interest from investors, pushing its assets under management (“AUM”) above $100 million by early 2016. While the fund’s 2015 performance fell a bit short of Morningstar’s Fund Manager of the Year award winner in the alternatives category, the Vanguard Market Neutral Fund (MUTF: VMNIX ), it did beat out 87% of its competitors in the market neutral category. In fact, the LMCG fund spent much less time underperforming over the course of 2015 than did the Vanguard fund. Click to enlarge “The fund has gained early traction with sophisticated advisors, who are familiar with alternative mutual funds and feel comfortable using it for a variety of goals,” said LMCG CEO Kenneth Swan, in a recent statement celebrating the milestone. “Traditional ‘low-volatility’ options such as bond funds or allocating to cash may not deliver the overall return profile these advisors are seeking. We designed this fund to offer investors a different option: to potentially generate positive returns regardless of the market’s direction.” The fund’s stock-selection process uses quantitative methodology that’s been “time-tested over 15 years and stress-tested in extreme market selloffs.” The strategy seeks capital preservation and is designed to generate positive returns in any market environment. Macro bets are avoided, and the fund does not use leverage. Volatility Likely to Continue “Equity markets could continue to be volatile in 2016,” said Gordon A. Johnson, Lead Portfolio Manager of the fund. “Our fund is designed to generate alpha on the long and short side – both domestically and internationally – and strives to provide a smoother ride for the investor whether the volatility that we are seeing continues or subsides.” The LMCG Global Market Neutral Fund is available in institutional ( GMNIX ) and investor (MUTF: GMNRX ) share classes, with respective net-expense ratios of 1.60% and 1.85%, excluding certain expenses as outlined in the prospectus. The minimum investment for GMNIX is $100,000, while the minimum for GMNRX is $2,500. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.
New Energy Fund Seeks To Capitalize On Sector Dislocations
The North American energy landscape is changing rapidly, as the shale boom that led to record production and U.S. inventory levels is being followed by a Middle East oil conflict that is driving oil prices vastly lower. In response, OppenheimerFunds has launched the Oppenheimer SteelPath Panoramic Fund, which is designed to capitalize on the industry tumult with a long-term, value-oriented approach to investing in all “links” in the North American energy value chain. “We are investing in companies that are best positioned to gain long-term advantage from these shifts and deliver relative performance across different commodity price scenarios,” said Brian Watson, CFA and Director of Research at Oppenheimer SteelPath, as well as Senior Portfolio Manager for the fund, in a statement. “Our long-term investment view allows us to benefit from expected dislocations in the evolving global energy market.” Targeting More Volatility, Better Returns Mr. Watson also said he thinks the Oppenheimer SteelPath Panoramic Fund will have more volatility than the firm’s other midstream energy-focused funds, but he also expected it to generate better returns. That’s because the fund attempts to identify value by focusing strictly on small- and mid-cap companies, which tend to be more volatile, over large-cap international oil-and-gas juggernauts. In Mr. Watson’s view, this approach should allow the fund’s investors to best benefit from the “U.S. energy revolution.” “The North American energy landscape has transformed, creating a generational shift in relative competitive advantage as well as new opportunities across the entire energy value chain,” said OppenheimerFunds CIO Krishna Memani. “Brian and his team are using their extensive knowledge of the energy sector to identify durable investment opportunities for our clients.” The energy “value chain” includes: “Upstream” companies that explore for and produce oil, natural gas, and other hydrocarbons; “Midstream” companies that gather, transport, store, distribute, or market energy products; and “Downstream” companies that process, treat, or refine hydrocarbons. Total Return Focus The Oppenheimer SteelPath Panoramic Fund, which went live on November 18 of last year, will invest in all three links of this chain, as well as other energy beneficiaries – chemicals and materials manufacturers, engineering and production companies, etc., – that stand to benefit from energy-related activities. The new fund’s stated objective is to provide total return. Its shares are available in A (MUTF: EESAX ), C (MUTF: EESCX ), R (MUTF: EESRX ), Y (MUTF: EESYX ), and I (MUTF: EESIX ) classes, with respective net-expense ratios of 1.55%, 2.30%, 1.80%, 1.30%, and 1.10%. The minimum initial investment for Class I shares is $5 million – the minimum for all other classes is $1,000. For more information, visit the fund’s web page .