The fund returned 5.72% (Series F) in June compared to the benchmark which returned 5.60%. Year-to-date to the end of June, the fund has returned -0.92% vs the benchmark return of 8.88%. The fund is weighted as follows:
• 65% Gold
• 20% Energy
• 5% Base Metals
• 7% Uranium
• 3% Other
June was another month of deteriorating global economic data. In the US we saw durable goods, manufacturing PMI and new home sales miss expectations. Eurozone manufacturing PMIs continued to signal contraction for the fifth straight month. Chinese manufacturing PMIs missed expectations and moved into contractionary territory. The rest of Asia is also struggling with Japan, Korea, Malaysia and Taiwan also printing contractionary PMIs in June. This is a global slowdown. Note that PMIs are one of the most reliable leading indicators. Given the economic developments year-to-date and the current backdrop (See April commentary for more color), once could logically conclude that broader markets would at best be muddling along while gold equities would be putting in new highs. This is not the case but there is hope.
The real big news during June was that gold bullion finally broke a formidable resistance level that had been in place for 5+ years. Bold statement: Given the big technical break, current global economic conditions, the existing geopolitical backdrop and the political trajectory in developed economies towards Modern Monetary Theory means we are likely in the very early innings of a GOLD BULL MARKET. What about the gold equities? It always takes some time for capital to make its way into the equities. Therein lies the opportunity: While the gold bullion rally certainly appears to have legs and gold is trading above its 2016 peak of $1366, the GDX is ~20% below its 2016 peak levels while the GDXJ is ~33% off its 2016 peak. A simple retracement of gold equities to 2016 highs would lead to a 25% rally in large cap miners (GDX) and a 50% rally in the junior/mid cap miners (GDXJ). The Resource Class is heavily weighted to junior gold equities.
2018 Flow-Through Update
The fund is weighted as follows:
• 66% Gold
• 24% Energy
• 4% Base Metals
• 6% Uranium
2018 II Flow-Through Update
The fund is weighted as follows:
• 72% Gold
• 6% Energy
• 6% Base Metals
• 16% Uranium
2019 Flow-Through Update
At the end of June, the fund was 44% invested. 30% has been allocated to gold mining equities while base metal and uranium equities represent the balance. The portfolio currently consists of 20 companies with a weighted average market capitalization of $120M.
Jason Mayer, CFA, MBA
1 All returns and fund details are a) based on Series F shares; b) net of fees; c) annualized if period is greater than one year; d) as at June 28, 2019; e) 2011 annual returns are from 10/17/11 to 12/31/11. Blended Index (50/50 S&P/TSX Capped Materials Total Return Index and S&P/TSX Capped Energy Total Return Index) and is computed by Ninepoint Partners LP based on
available index information.
The Fund is generally exposed to the following risks. See the prospectus of the Fund for a description of these risks: capital gains risk; class risk; commodity risk; concentration risk; currency risk; derivatives risk; exchange traded funds risk; foreign investment risk; inflation risk; liquidity risk; market risk; regulatory risk; securities lending, repurchase and reverse repurchase transactions risk; series risk; short selling risk; small capitalization natural resource company risk; small company risk; tax risk; uninsured losses risk.
Ninepoint Partners LP is the investment manager to a number of funds (collectively, the “Funds”). Commissions, trailing commissions, management fees, performance fees (if any), and other expenses all may be associated with investing in the Funds. Please read the prospectus carefully before investing. The indicated rates of return for series F of the Funds for the period ended June 28, 2019 are based on the historical annual compounded total returns including changes in [unit/share] value and reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.
The information contained herein does not constitute an offer or solicitation by anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should contact their financial advisor to determine whether securities of the Funds may be lawfully sold in their jurisdiction.
The opinions, estimates and projections (“information”) contained within this report are solely those of Ninepoint Partners LP and are subject to change without notice. Ninepoint Partners LP makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, Ninepoint Partners LP assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. Ninepoint Partners LP is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Ninepoint Partners LP. Any reference to a particular company is for illustrative purposes only and should not to be considered as investment advice or a recommendation to buy or sell nor should it be considered as an indication of how the portfolio of any investment fund managed by Ninepoint Partners LP is or will be invested. Ninepoint Partners LP and/or its affiliates may collectively beneficially own/control 1% or more of any class of the equity securities of the issuers mentioned in this report. Ninepoint Partners LP and/or its affiliates may hold short position in any class of the equity securities of the issuers mentioned in this report. During the preceding 12 months, Ninepoint Partners LP and/or its affiliates may have received remuneration other than normal course investment advisory or trade execution services from the issuers mentioned in this report.
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