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The Global Resources Fund underperformed its benchmark, the S&P Global Natural Resources Index, by 157 basis points in October. However, the fund posted a positive absolute return of 8.24 percent for the period. See complete fund performance here.
- The fund’s stock selection in the fertilizer and chemicals industries had a large positive contribution to the fund’s performance for the month of October.
- The fund’s overweight position in junior growth stocks helped lead to the fund’s outperformance against its benchmark during October.
- For the month, Gran Colombia Gold notes and Newfield Exploration were the best performers within the fund.
- The fund’s high cash position contributed to the bulk of the fund’s underperformance.
- The fund’s stock selection in the agribusiness and underweight in the integrated oil and gas sectors led to a negative contribution to the fund’s performance.
- Rio Tinto was the worst performer within the fund for the month of October.
- Companies continue to shut down oil and gas rigs as prices remain unprofitable. The Baker Hughes North America Rotary Rig Count fell to 775, its lowest level since 2002. It appears to be only a matter of time until the supply/demand balance puts stronger upward pressure on oil and gas prices.
- We are seeing a supportive forecast for crude oil pricing next year, as the Organization of Petroleum Exporting Countries (OPEC) stated in its monthly report that U.S. oil production is projected to decrease in 2016 for the first time in eight years. Total output of crude and natural gas liquids is estimated to fall 0.5 percent to 12.47 million barrels a day.
- China continues to stimulate its slowing economy, and many analysts are expecting even larger stimulus packages to be implemented in the near future. Additionally, China’s Caixin Manufacturing PMI was 48.30 in October, up from 47.20 in September.
- Net-short positions in the futures market reached an all-time high for natural gas as traders expect to see lower prices for winter heating fuel.
- Predictions for the third-strongest El Niño season since 1950 appear to be gaining momentum. Pacific typhoons, droughts and floods throughout the world have already begun causing havoc in agriculture and infrastructure, according to Bloomberg.
- The Federal Reserve reignited investor fears of a rate hike this year. Gold and other precious metals could see further downward pressure and put further upward pressure on the dollar.
Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. For a portion of periods, the fund had expense limitations, without which returns would have been lower. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance does not include the effect of any direct fees described in the fund's prospectus (e.g., short-term trading fees of 0.05%) which, if applicable, would lower your total returns. Performance quoted for periods of one year or less is cumulative and not annualized. Obtain performance data current to the most recent month-end here or by calling 1-800-US-FUNDS.
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 Baker Hughes North American Rotary Rig Count is a service to the petroleum industry since 1944. The report is released weekly at noon central time on the last day of the work week. The China Caixin Manufacturing PMI is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as an leading indicator for the whole economy. When the PMI is below 50.0 this indicates that the manufacturing economy is declining and a value above 50.0 indicates an expansion of the manufacturing economy.
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 09/30/2015: Gran Colombia Gold Corp. 3.13%, Newfield Exploration Co. 2.42%, Rio Tinto PLC 0.33%, Baker Hughes Inc. 0.00%.