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November 2014

The Global Resources Fund fell 11.84 percent in November, following a difficult month for commodities and natural resource stocks. The fund lagged its benchmark, the S&P Global Natural Resources Index, which lost 2.43 percent during the month. See complete fund performance here.

Strengths

  • The fund's underweight position in integrated oil & gas stocks as well as major mining stocks positively contributed to the fund's performance this month.
  • Superior stock selection in base metals stocks as well as oil refining stocks also had a positive contribution to the fund this month.
  • Nevsun Resources Ltd. was the single largest positive contributor to the fund's performance for the month.

Weaknesses

  • The fund's overweight position in oil service & equipment stocks and underweight position in fertilizers & chemicals stocks negatively contributed to its performance this month.
  • Stock selection in iron and steel stocks as well as precious metals stocks had a negative contribution to the fund's performance this month.
  • TransGlobe Energy Corporation was the largest negative contributor to the performance of the fund in the month of November.

Opportunities

  • Supportive data points for oil were seen this month as 4,520 permits for new oil and gas wells were approved in November, down 37 percent from 7,227 in October. Although early data such as this isn't always completely accurate, at least it shows signs that U.S. oil growth should slow next year, helping to mitigate supply glut fears.
  • The global manufacturing sector continued to grow in November, according to the manufacturing purchasing managers' index (PMI) data released this month. This is a supportive sign for commodity demand.
  • China's unexpected rate cut this month is already having positive repercussions in the commodities space. The new monetary stimulus should continue to boost the energy and metals space, especially if manufacturing PMI numbers rise as a result.

Threats

  • As long as oil prices hover around the $60 per barrel level, energy producers could see their debt-to-enterprise levels rise to a point that could imply a 30-percent default rate for the whole segment, according to one Wall Street firm.
  • It's obvious that the single largest threat to the commodities space right now is falling oil prices. OPEC's decision not to cut production sent crude prices tumbling. However, although OPEC failed to surprise the markets and cut production this time around, it is only a matter of time before the large oil exporters will buckle under the pain of lower oil revenue.

Past performance does not guarantee future results.

The S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified, liquid and investable equity exposure across 3 primary commodity-related sectors: Agribusiness, Energy, and Metals & Mining. The Purchasing Manager's Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Resources Fund as a percentage of net assets as of 09/30/2014: Nevsun Resources Ltd. 0.00%, TransGlobe Energy Corp 1.48%.

Net Asset Value
as of 01/28/2015

Global Resources Fund PSPFX $6.32 -0.15 Gold and Precious Metals Fund USERX $5.92 -0.22 World Precious Minerals Fund UNWPX $5.11 -0.16 China Region Fund USCOX $8.31 -0.04 Emerging Europe Fund EUROX $6.37 -0.18 All American Equity Fund GBTFX $27.12 -0.35 Holmes Macro Trends Fund MEGAX $20.09 -0.17 Near-Term Tax Free Fund NEARX $2.27 0.01 China Region Fund USCOX $8.31 -0.04