This week, we are taking a look at the best- and worst-performing energy mutual funds. Excluding the funds betting against the sector, the average energy fund we track lost 1.84% for the five trading days ending Thursday, May 1.
This week, the
Federal Reserve cut its target rate to 2%. It bolstered the move in the accompanying policy statement, which says that the cutting actions to date have been "substantial" and no more reductions should be necessary.
But behind the scenes, the Fed is continuing to inject banking liquidity by expanding its cash-loan auctions and widening the range of asset-backed securities it will accept as Treasury loan collateral.
Investors clinging to the idea that the U.S. government might stop undermining the U.S. dollar sent the greenback to a five-week high against the major world currencies. Crude oil corrected from its recent high of around $120 a barrel, souring investment in energy stocks and funds.
The worst-performing energy fund this week is the
ProFunds Oil Equipment Distribution & Services UltraSector ProFund(OEPIX Quote - Cramer on OEPIX - Stock Picks). The fund lost 5.44% for the five trading days ending Thursday, May 1.
The four largest holdings include
Schlumberger(SLB Quote - Cramer on SLB - Stock Picks), down 3.52%;
Transocean(RIG Quote - Cramer on RIG - Stock Picks), down 4.02%;
Halliburton(HAL Quote - Cramer on HAL - Stock Picks), down 4.18%; and
National Oilwell Varco(NOV Quote - Cramer on NOV - Stock Picks), down 9.82%.
Strong earnings releases from
Grey Wolf(GW Quote - Cramer on GW - Stock Picks) and
Oceaneering International(OII Quote - Cramer on OII - Stock Picks) helped limit the declines in these shares to 7.59% and 7.42%, respectively.
The
United States Heating Oil Fund LP(UHN Quote - Cramer on UHN - Stock Picks), an ETF tracking the movements of New York heating oil that began trading less than a month ago, slipped 4.93%.
In third place on the worst-performer list is the
Ultra Oil & Gas Proshares(DIG Quote - Cramer on DIG - Stock Picks). The stocks in the Dow Jones U.S. Oil & Gas Index sank 1.96%, and the 200% leverage translated this into a return of negative 4.58%. The holding falling the furthest, crashing 15.24%, was
Cheniere Energy(LNG Quote - Cramer on LNG - Stock Picks), as it was revealed that corporate insiders sold $17.4 million of Cheniere stock during the week ending April 25.
Another new ETF, the
United States Gasoline Fund LP(UGA Quote - Cramer on UGA - Stock Picks), which has traded since the end of February, ranks fourth, losing 4.44%. In theory, as this ETF tracks the price of unleaded gasoline futures contracts, investors could buy it to hedge their yearly driving exposure at the pump.
Worst-Performing Energy Funds for the Week Ending Thursday May 1
|
| Fund
|
Ticker
|
Rating
|
Fund Type
|
1 Week Total Return
|
| ProFunds Oil Equip Dist & Svcs UltraSector ProFund
|
OEPIX
|
U
|
Open-End
|
-5.44%
|
| United States Heating Oil Fund LP
|
UHN
|
U
|
ETF
|
-4.93%
|
| Ultra Oil & Gas ProShares
|
DIG
|
B
|
ETF
|
-4.58%
|
| United States Gasoline Fund LP
|
UGA
|
U
|
ETF
|
-4.44%
|
| Market Vectors Global Alternative Energy ETF
|
GEX
|
U
|
ETF
|
-4.42%
|
| PowerShares Dynamic Oil & Gas Services Portfolio
|
PXJ
|
C+
|
ETF
|
-4.22%
|
| Claymore/MAC Global Solar Energy Index ETF
|
TAN
|
U
|
ETF
|
-4.18%
|
| Market Vectors-Coal ETF
|
KOL
|
U
|
ETF
|
-3.84%
|
| Kayne Anderson Energy Total Return Fund
|
KYE
|
D
|
Closed-End
|
-3.71%
|
| iPath Dow Jones AIG Energy Total Return Sub-Index ETN
|
JJE
|
U
|
ETF
|
-3.68%
|
| Source: Bloomberg & TheStreet.com Ratings
|
On the up side for the energy funds this week are the funds betting on the downside. The
MACROshares Oil Down Tradeable Trust(DCR Quote - Cramer on DCR - Stock Picks) tracks the inverse performance of the price of crude oil. Collapsing 75.59% in the last year, this fund proves that dead cats really do bounce, gaining 7.90% for the period.
Half of the other winning positions on our best-performer list include funds holding master limited partnerships. These investments generate a stream of income from production, exploration, and transportation of energy through pipelines and marine shipping. Their income has more to do with longer-term bullish trends in fuel prices than short-term, news-cycle volatility.
The closed-end funds
Tortoise Energy Infrastructure Corporation(TYG Quote - Cramer on TYG - Stock Picks) and
Energy Income and Growth Fund(FEN Quote - Cramer on FEN - Stock Picks) led this group, with each returning just over 4% this week.
Three of the top-ranked partnerships held by FEN include
Holly Energy Partners LP(HEP Quote - Cramer on HEP - Stock Picks), up 9.70%;
MarkWest Energy Partners LP(MWE Quote - Cramer on MWE - Stock Picks), up 8.38%; and
Alliance Resources Partners LP(ARLP Quote - Cramer on ARLP - Stock Picks), up 6.61%.
Best-Performing Energy Funds for the Week Ending Thursday May 1
|
| Fund
|
Ticker
|
Rating
|
Fund Type
|
1 Week Total Return
|
| MACROshares Oil Down Tradeable Trust
|
DCR
|
E-
|
ETF
|
7.90%
|
| UltraShort Oil & Gas ProShares
|
DUG
|
E-
|
ETF
|
4.16%
|
| Tortoise Energy Infrastructure Corp
|
TYG
|
C-
|
Closed-End
|
4.07%
|
| Energy Income and Growth Fund
|
FEN
|
C
|
Closed-End
|
4.02%
|
| Fiduciary/Claymore MLP Opportunity Fund
|
FMO
|
C
|
Closed-End
|
3.56%
|
| MLP & Strategic Equity Fund Inc
|
MTP
|
U
|
Closed-End
|
2.37%
|
| WisdomTree International Energy Sector Funds
|
DKA
|
C+
|
ETF
|
2.10%
|
| ProFunds Short Oil & Gas ProFund
|
SNPIX
|
U
|
Open-End
|
1.95%
|
| BearLinx Alerian MLP Select Index ETN
|
BSR
|
U
|
ETF
|
1.26%
|
| PowerShares WilderHill Progressive Energy Portfolio
|
PUW
|
D+
|
ETF
|
1.04%
|
| Source: Bloomberg & TheStreet.com Ratings
|
If you believe that the
Federal Reserve is done cutting interest rates for the next year, that the economy is going to get back to moderate growth, and that the U.S. dollar is primed for a huge rally, then this may be the grand bearish turning point you are looking for in the energy market and other commodity markets.
Economists and TV pundits may proclaim that today's report of a 5% jobless rate, down from 5.1% in March and losing only 20,000 workers from the payroll instead of 81,000 over the same periods, means the recession we are in is almost over before it has been officially declared begun.
In this optimistic scenario, the speculators that have pushed up energy prices would bail out and start buying companies that have returned to profitability in the first quarter.
To me, this looks more like an attractive, buy-on-the-dip entry point for energy investments.
For an explanation of our ratings,
click here.
Kevin Baker
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