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Number Cruncher

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Number Cruncher

A tarnished month for funds that bet on silver Add to ...

What are we looking for?

How funds have fared in a month when one theory is to "sell in May and go away."

Summer is generally the worst time for stock markets, while the best time is from November to April.

The screen

We looked at the biggest fund losers in May. We excluded U.S. dollar, segregated, pooled, alternative strategy and retail venture capital funds. We also left out duplicate versions of funds, and those aimed at so-called "accredited" wealthy or sophisticated investors.

What did we find?

Resource and smaller-cap investment funds in a big funk.

FrontierAlt Resource Capital, which has been run by Lightwater Partners Ltd. since last August, took the biggest hit, plunging 14.6 per cent.

Jerome Hass, a member of Lightwater portfolio team, said that the resource fund's performance was hurt last month by small-cap names, but would not say which ones.

Big losers also included Sprott Canadian Equity and BMB BullionFund, respectively, off 9.6 per cent and 9.2 per cent. Both had big bets on silver bullion , the price of which fell sharply in May, and gold, which saw a smaller pullback.

Sprott Canadian Equity, which is co-run by managers Eric Sprott and Allan Jacobs, had a 21-per-cent weighting in silver, and 7-per-cent in gold.

BMG Bullion Fund, which invests in gold, silver and platinum bullion, held about a 40-per-cent weighting in silver. The heavy position stems from the runup in the silver price. This bullion mutual fund, which was launched with equal amounts in the three metals, doesn't rebalance the weightings back to their original percentage.

Nick Barisheff, president and chief executive officer of BMG Bullion Management, said he "wouldn't be surprised" if silver rallied back to its recent high of $50 (U.S.) an ounce by year end. Silver, which fell to a low of $26 an ounce last month, closed Friday at $37.38 in London.

With increasing government debt, deficits, bailouts and the end of quantitative easing this month in the United States, "currencies are going to keep depreciating and the prices of metals are going to keep rising," Mr. Barisheff suggested.

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