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Number Cruncher

Natural resource funds regain their sparkle after gloom of 2011 Add to ...

What are we looking for?

How natural resource equity funds are faring this year amid growing optimism about the global economy.

The commodities sector struggled last year as investors fretted over euro-zone debt woes, a sluggish U.S. economy and slower growth in China.

The screen

We ranked the top resource-fund performers for the first two months of this year. U.S. dollar, segregated and duplicate versions of the funds were excluded.

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What did we find?

Funds loaded with either uranium, gold or energy stocks leading the commodity pack.

Middlefield Uranium Focused Metals gained 22.8 per cent as uranium equities rebounded from depressed levels in 2011. The stocks took a beating following last year’s nuclear disaster in Japan at its Fukushima power plant.

The fund benefited from having a 60-per-cent exposure to uranium securities versus 32 per cent at the end of 2011, said Jason Mayer, a portfolio manager with Middlefield Capital Corp.

Some of fund’s recent winners have included Cameco Corp., Uranium One Inc. and Denison Mines Corp. Stocks have climbed in anticipation that prices for uranium would be rising, he added. The spot price for uranium has been stuck recently around $52 (U.S.) a pound.

DMP Resource Class, which is managed by Ned Goodman of Ned Goodman Investment Counsel Ld., also returned 22.8 per cent. The fund, which is about half invested in gold and precious metals miners, benefited from rising gold and silver bullion prices.

Qwest Energy Canadian Resource Class, which invests mainly in Canadian and international junior oil and gas companies, rose 17.1 per cent. The fund has been helped by a surging oil price. Crude futures in New York hit the $107-per-barrel range by the end of February.

Natural gas prices , meanwhile, have tumbled amid a warm North American winter and a supply glut. “We don’t see a lot of value in the natural gas names right now,” said Don Short, a portfolio manager with Qwest Investment Fund Management Ltd. Strong recent performers for his fund have included Hyperion Exploration Corp., Americas Petrogas Inc. and Canacol Energy Ltd.

DMP Resource and the Qwest Energy Canadian Resource have served mainly as a landing place for monies rolled over from the termination of flow-through limited partnerships, but anyone can invest in them.

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