QikReview: Top Specialty-Natural Resources Mutual Funds

Below is a brief review of three Specialty-Natural Resources mutual funds.

T. Rowe Price New Era (PRNEX)

Category: Specialty-Natural Resources
Rating: 4
Capital Gains Exposure: 45%
Assets: $6.2 bil
Expense Ratio: 0.66%
Turnover Ratio: 16%
Yield: 0.93%
Redemption Period: 0 days
Redemption Fee: 0.0%
3-Year Total Cost: $211
Minimum Investment: $3,000
Comments: Although absolute returns are solid (31% 5-year returns and 15% 10-year returns), relatively speaking this fund is in the middle of the pack as it ranks a measly #50 among peers in 10-year returns and #55 in 5-year returns. Volatility seems to be relatively low. This Large-cap Growth fund invests into Giant (34), Large (39), and Medium (24) companies. Has 6% in Cash and 30% fo total assets in Foreign Stocks. Invests in Industrials (24) and Energy (66) sectors. Specifically, it invests into Oil & Gas (28), Oil & Gas Services (31), Utilities (6), Misc. Industrials (10). It has a large number of holdings, 106, and a low-level of concentration into particular stocks (only 28% of assets in the Top 10 holdings), but turnover ratio is tiny at 16%. I recognize most of the companies on their top 25 holdings list. I think this is a solid fund with a diversified focus that I'll keep an eye on, but ignore for the time being because of the run-up of prices in the energy and natural resources companies.

Excelsior Energy & Natural Resources (UMESX)

Category: Specialty-Natural Resources
Rating: 4
Capital Gains Exposure: 10%
Assets: $0.7 bil
Expense Ratio: 1.12%
Turnover Ratio: 279%
Yield: 0.10%
Redemption Period: 30 days
Redemption Fee: 2.0%
3-Year Total Cost: $359
Minimum Investment: $2,500
Comments: Middle-of-the-pack performance with a significant volatility. Even though absolute returns are respectable, relative to its peers it's fairly average. This Large-cap Growth fund invests into Giant (20), Large (43), Medium (26), and Small (9) companies. It invests into Industrials (23) and Energy (73). More specifically: Oil & Gas (51), Oil & Gas Services (25), and Hard Commodities (6). It has 3.3% of assets in Cash. It has a reasonable number of holdings at 55, but a very high turnover ratio of 279%. It's probably a decent choice as far as energy/mining funds go, but I wouldn't touch it at this point.

U.S. Global Investor (PSPFX)

Category: Specialty-Natural Resources
Rating: 4
Capital Gains Exposure: 14%
Assets: $1.5 bil
Expense Ratio: 0.94%
Turnover Ratio: 122%
Yield: 5.17%
Redemption Period: 30 days
Redemption Fee: 0.3%
3-Year Total Cost: $316
Minimum Investment: $5,000
Comments: One of the best funds in its category by returns: it's #1 in 5-year returns, #13 in 10-year returns, and #11 in 3-year returns. It is definitely a cyclical fund as it was pretty much non-performing from 1998 until it roared back in 2003 and has been making amazing returns until now. So, for five years it was useless and for another 5 years it was stunning. I'm not sure how many more years it can yank out great returns, but I would think it's closer to the end of the booming cycle than the beginning. This is a Large-cap Growth fund that invests into the Industrial Materials/Energy sectors: Oil & Gas (29), Oil/Gas Productions (4), Oil & Gas Services (33), Utilities (4), Hard Commodities (19), and Misc Industries (3). It has 5% in Cash. It invests into Giant (26), Large (24), Medium (35) and Small (12) companies. 55% of assets are in the Foreign Stocks. It has 190 holdings, 122% turnover ratio, and only 26% of assets in the Top 10 holdings. I think this fund has too many holdings and is toward the end of its cycle. So, even though it's good fund to keep in mind in the future, at this time I will most certainly pass on it although it may very well post solid returns in 2008.

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