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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 .

Will Semiconductor ETFs See A Brighter 2016?

The semiconductor industry has been on a roller coaster ride in recent times. The space hogged investors’ attention in 2014 only to plunge the very next year. The struggling PC market took all the shine out of this segment. Two independent research firms – Gartner and International Data Corporation – validated the fact. As per Gartner, PC shipments in 2015 totaled 288.7 million units, marking an 8% decline from 2014. Meanwhile, according to IDC, PC shipments witnessed a decline that was “the largest in history ” breezing past the 9.8% drop registered in 2013. In fact, the fourth quarter of 2015 marked the fifth successive quarter of global PC shipment decline, pointing at soft holiday season sales and a shift in consumers’ PC purchase preference, per Gartner. Both firms agreed that the launch of Windows 10 in third-quarter 2015 had an insignificant impact on PC shipments during the all-important holiday season. This was because customers upgraded their existing PCs rather than buying new ones. Also, a strong greenback, higher inventories in the semiconductor and electronics supply chain are also held responsible for this decline, per the research agencies. What’s in Store in 2016? However, most research agencies expect things to improve in 2016. In any case, the wind is in favor of the broader technology sector. As a result, semiconductor, the value-centric traditional tech area should expand modestly this year, primarily in the second half. Value-oriented trading should be in focus this year thanks to a paradigm shift in global economy. Policy tightening in the U.S., an accommodative stance in most developed economies, and lack of clarity about China’s currency movements should keep value investing busy throughout this year. Secondly, IDC predicts that the take-up of Windows 10 by corporates is likely to pick up and consumer purchase will be steady by the second half of 2016. Also, attractive PCs at affordable prices, the need for higher security and improved performances will eventually drive consumers toward an upgrade. The World Semiconductor Trade Statistics (WSTS) predicts the global semiconductor market to grow 1.4% to $341 billion in 2016 and 3.1% to $352 billion in 2017. This explains that moderate optimism is prevailing around the area. All regions are expected to post positive growth in 2017 with the Americas leading the way. Also, this tech sub-sector might shoot up on the requirement of its products in emerging technology applications like tablets and smartphones despite subdued PC shipments. If this was not enough, the semiconductor space is consolidating rapidly with a number of deals announced lately. ETFs to Play The latest discussion definitely tells you to park your money in semiconductor ETFs, especially after a down year like 2015. At present, there are four regular semiconductor ETFs namely Market Vectors Semiconductor ETF (NYSEARCA: SMH ), iShares PHLX Semiconductor ETF (NASDAQ: SOXX ), SPDR S&P Semiconductor ETF (NYSEARCA: XSD ) and PowerShares Dynamic Semiconductors Fund (NYSEARCA: PSI ) . Why to Look Beyond SMH? Of these, only SMH has a Zacks ETF Rank #3 (Hold) while the other three have a Zacks ETF Rank #1 (Strong Buy). Investors should note that SMH has as much as 18.6% exposure in Intel Corp., the biggest weight of the basket. Though Intel has exposure in three other ETFs, the weight is not as much as it is for SMH. As a result, the recent underperformance by the Intel stock post earnings cast out SMH from the ‘Strong Buy’ league. Below, we highlight three other semiconductor ETFs in detail for the interested investors. SOXX in Focus This ETF follows the PHLX SOX Semiconductor Sector Index and offers exposure to 30 U.S. firms. The fund has amassed $409.3 million in its asset base. The product charges a higher fee of 48 bps a year from investors. Intel (NASDAQ: INTC ) takes the fourth spot at 7.8% of total assets. XSD in Focus This fund tracks the S&P Semiconductor Select Industry Index, holding 42 stocks in its portfolio. It is widely spread across a number of securities as none of these allocates more than 3.44% of the assets. The product has a definite tilt toward small cap stocks at 65% while the rest is evenly split between the other two market cap levels. The $196.7-million fund charges 35 bps in fees per year. PSI in Focus This fund tracks the Dynamic Semiconductor Intellidex Index, holding 29 U.S. securities in the basket. Intel makes up for 5.2% share in the basket and not in the top-three holdings. This $50.7-million ETF charges 63 bps in fees. Original Post