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Advisor Natural Resources Restructuring Support
Rationale for attempting to restructure Advisor Natural Resources
The fund has been energy primarily
70% to 80% of the portfolio has been energy
One of the highest R2s to the S&P Energy Index among competitors
The fund's return and risk profile has been highly comparable to Select Energy (3-year return: 37% vs. 40%; standard deviation: 20% for both; 5-year return: 18% vs. 19%)
How investors hold the fund does not appear to restrict their choices
Only 5% of fund assets are held in Premium 401(k)s
The consensus of our client-facing contacts is that our IPs would prefer to know what the fund is
Energy, not energy with some materials
Why would IPs sell our fund if they wanted energy?
Lack of choice-AIM, which was launched in 2002, and Rydex are the only energy funds with a load or 12b-1; Vanguard, Fidelity, and ICON have no-load energy funds
High R2 to Energy Indices. Even higher than AIM Energy
There's evidence that investors have preferred alternatives to natural-resources
Most of our fund's growth has come from returns, not sales
Net sales since 1/1/02 were $146 million or 25% of the asset growth; Net sales were $84 million year-to-date through July
ETF energy assets were $5.8B vs. $1.4B for natural resources
The largest non-prop fund in the Morningstar Specialty-Natural Resources category is PIMCO Commodities Real Return
If shareholders don't like the proposal to restructure the fund, they'll vote it down
Competitive landscape-Key Morningstar category competitors
Fund | Assets
($MM) | %
Energy | %
Industrial
Materials | Stars | 3 Yr Ann
Return | R2 to S&P
Energy Index | R2 to S&P
Materials
Index |
PIMCO Commodities RR Inst | $12,305 | NA | NA | 2 | 21.45% | .25 | .00 |
Ivy Global Natural Resources A | $4,028 | 45% | 48% | 4 | 37.70% | .65 | .41 |
RS Global Natural Resources | $1,999 | 60% | 30% | 4 | 38.80% | .80 | .33 |
Oppenheimer Real Assets A | $1,881 | NA | NA | 2 | 22.16% | .22 | .01 |
Jennison Natural Resources B | $1,785 | 62% | 38% | 4 | 42.53% | .72 | .26 |
AIM Energy A | $1,571 | 98% | 0% | 4 | 41.53% | .85 | .12 |
Blackrock Global Resources A | $1,191 | 90% | 5% | 4 | 51.53% | .72 | .29 |
Fidelity Advisor Natural Resources T | $842 | 71% | 23% | 3 | 36.60% | .87 | .25 |
Putnam Global Natural Resources A | $658 | 78% | 19% | 3 | 33.52% | .91 | .27 |
Franklin Natural Resources A | $478 | 78% | 17% | 2 | 35.60% | .87 | .25 |
Source:Morningstar; Green = Funds with higher materials allocations than our fund (Oppenheimer uses the DJ AIG Index which caps energy)
