Opportunities in Energy

Transcription

1 Opportunities in Energy Frank Holmes, CEO and Chief Investment Officer usfunds.com US.FUNDS November

2 About U.S. Global Investors (GROW) A boutique publicly listed investment adviser specializing in gold, natural resources and emerging markets opportunities around the world. 2

3 Performance and Results Oriented Investment leadership results in performance Winner of 29 Lipper performance awards, certificates and top rankings since 2000 (Four out of 13 U.S. Global Investors Funds received Lipper performance awards from 2005 to 2008, six out of 13 received certificates from 2000 to 2007, and two out of 13 received top rankings from 2009 to 2010.) 3

4 Fund Recognition: 2 Funds in the Top 20 Percent for 10-Year Period 4

5 Based on Risk-Adjusted Return 5

6 Focus on Education 54 MFEA STAR Awards for Excellence in Education 6

7 Branding Education Investor Alert and Advisor Alert are key communication tools Our original, award-winning educational content is in high demand from investors via , website, social media platforms, apps 7

8 Emerging World Holds 50% of the Global Population, Just 23% of GDP 8

9 Are YOU Reading U.S. Global s Investor Alert? Jim Cramer Is. Tweeted to his loyal 600,000 readers 9

10 More Research from U.S. Global Investors Download our latest research on 10

11 Generating Alpha Performance and Results Oriented 11

12 Contrarian Opportunity Investors Too Pessimistic? 12

13 Contrarian Opportunity Time to Own the Most Underowned Areas of the Market? Overloved Underloved 13

14 Tipping Point for Equities? In October, the Vanguard Total Stock Market Index Fund became the largest mutual fund by assets, surpassing Pimco s Total Return Fund. Pimco held that title for five years. The gains in the Vanguard fund show how the investment landscape is being reshaped by investors thirst for income-generating assets at a time of interest rates near record lows, following hefty flows into bonds in the aftermath of the financial crisis, says the Wall Street Journal. 14

15 What s Driving Energy? Factor 1 15

16 What s Driving Energy? Factor 2 16

17 What s Driving Energy? Factor 3 17

18 What s Driving Energy? Factor 4 18

19 What s Driving Energy? Factor 5 19

20 Will Rising Inflation Rates Drive Gold Higher? 20

21 A Case for Commodities in a Rising Rate Environment Download Your Free Copy of Our New Special Commodities Report at usfunds.com 21

22 Contrarian Ideas Commodities Similar to 2008, Shortly Before Commodities Took Off Opportunity Source: Bank of America Merrill Lynch, U.S. Global Investors 22

23 Contrarian Ideas Global Materials Similar to 2008, Shortly Before Global Materials Stocks Took Off Opportunity Source: Bank of America Merrill Lynch, U.S. Global Investors 23

24 Contrarian Ideas Energy Stocks Similar to 2008, Shortly Before Energy Stocks Took Off Opportunity Source: Bank of America Merrill Lynch, U.S. Global Investors 24

25 Is Today s Inflation Manipulated? 25

26 10-Year Rolling Average CPI Since 1972 is 2.43% 26

27 Fear of QE3 Slowing Triggered Massive Outflows in Funds Ben Bernanke 27

28 Germany Participating in Global Recovery Good for Energy Demand 28

29 Europe s GDP Expected to Rise Over Next 12 Months Good for Energy Demand 29

30 China s PMI Continues to Expand August 26, 2013 August 2, 2013 March 5,

31 Record Crude Imports into China 31

32 The Keqiang Index Solidly Above Three-Month Moving Average Xi Jinping September 27,

33 OPEC s Spare Capacity Is Below 5 Percent of Global Production 33

34 Tight Spare Capacity Leading to Record Saudi Oil Production 34

35 M&A Excitement Cheapest Reserves and Production are Listed 35

36 Cheapest Reserves and Production are Listed Carl Icahn Past performance does not guarantee future results. 36

37 Contrarian Opportunity Global Resources Fund (PSPFX) Sees Golden Cross See performance page for complete fund performance. Past performance does not guarantee future results. 37

38 Cyclical Stocks Poised to Outperform October 18,

39 Cyclical Stocks Poised to Outperform 39

40 Contrarian Idea Buy Cyclical Stocks October 18,

41 Cyclical Stocks Gaining Strength in

42 U.S. Global Domestic Equity Funds October 18, 2013 See performance page for complete fund performance. Past performance does not guarantee future results. 42

43 Holmes Fund Model October 18, 2013 See performance page for complete fund performance. Past performance does not guarantee future results. 43

44 Texas Oil Boom October 25,

45 Texas Oil Boom October 25,

46 Oil Production Remains Elevated in Texas Permian Basin 46

47 If Texas were a Country, It d be the World s 13 th Largest Oil Producer October 25,

48 U.S. Could Top Russia as World s Largest Oil and Gas Producer in

49 Manufacturing Activity Continues to Expand Good for Energy Demand 49

50 Energy and Materials Fund Holdings in Europe at 6-Year Lows Energy and Materials Fund Holdings in Europe at 6-Year Lows Active Weight 6% 4% Energy Materials 2% 0% -2% -4% AUG-06 AUG-07 AUG-08 AUG-09 AUG-10 AUG-11 AUG-12 Source: HSBC, EPFR, U.S. Global Investors 50

51 Permian Basin is Bigger than Eagle Ford and Bakken Combined 51

52 Permian Basin Oil Production May Reach More Than 3 Million Barrels of Oil Per Day by

53 Managing Expectations Yearly Volatility The Math Standard Deviation (as of 9/30/13) based on 10-Year Data Rolling 1 Year NYSE Arca Gold BUGS Index (HUI) 36.7% WTI Crude Oil 34.7% MSCI Emerging Markets (MXEF) 30.7% S&P 500 Index (SPX) 17.6% Gold Bullion 16.3% 12-month rolling volatility of price action over 10-year period View the presentation Anticipate Before You Participate at /investor-resources/publications/research 53

54 Managing Expectations Crude Oil Seasonality 54

55 Managing Expectations Natural Gas Seasonality 55

56 Global Resources Fund (PSPFX) As of 9/30/13 Average Dividend Yield of the Dividend-Paying Stocks and Bonds in the Fund as of 9/30/2013 Global Resources Fund 1.89% 56

57 57

58 Fund Performance 58

59 Disclosure Please consider carefully a fund s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting or by calling US-FUNDS ( ). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc. Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund s returns and share price may be more volatile than those of a less concentrated portfolio. Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund s performance more volatile. Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. Each tax free fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer. 59

60 Disclosure All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. Morningstar Ratings are based on risk-adjusted return. The Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) Lipper ratings are not intended to predict future results, and Lipper does not guarantee the accuracy of this information. More information is available at Lipper Leader Copyright 2013, Reuters, All Rights Reserved. 60

61 Disclosure The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index was designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years. The Purchasing Manager s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Dow Jones UBS Commodity Index is composed of futures contracts on physical commodities, and includes commodities traded on U.S. exchanges, with the exception of aluminum, nickel and zinc, which trade on the London Metal Exchange (LME). The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 1500 Composite is a broad-based capitalization-weighted index of 1500 U.S. companies and is comprised of the S&P 400, S&P 500, and the S&P 600. The index was developed with a base value of 100 as of December 30, Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility. The MSCI Developed Markets Index is a free float-adjusted, market capitalizationweighted index designed to measure equity market performance in 24 developed countries. The ISM New Orders Index is prepared by the Institute of Supply Management and is an indicator of the levels of new orders from customers. The ISM manufacturing composite index is a diffusion index calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states. 61

62 Disclosure Holdings in the U.S. Global Investors Funds mentioned as a percentage of net assets as of 9/30/2013: Agnico Eagle Mines (Gold and Precious Metals Fund 1.60%, World Precious Minerals Fund 1.80%); Alamos Gold (Gold and Precious Metals Fund 2.27%, World Precious Minerals Fund 2.33%); Anglogold Ashanti (Gold and Precious Metals Fund 0.05%, World Precious Minerals Fund 0.05%); Apple (MegaTrends Fund 1.01%; Aurico Gold (Gold and Precious Metals Fund 0.04%, World Precious Minerals Fund 0.03%); Barrick Gold (Gold and Precious Metals Fund 4.25%, World Precious Minerals Fund 0.47%); Cia De Minas Buenaventura (Gold and Precious Metals Fund 0.05%, World Precious Minerals Fund 0.02%); Dell 0.00%; Eldorado Gold (Gold and Precious Metals Fund 0.22%, World Precious Minerals Fund 0.12%); Facebook (All American Equity Fund 1.22%); Franco-Nevada (Gold and Precious Metals Fund 2.85%, World Precious Minerals Fund 1.13%); Gold Fields (Gold and Precious Metals Fund 0.07%, World Precious Minerals Fund 0.06%); Goldcorp (Global Resources Fund 1.69%, Gold and Precious Metals Fund 0.54%, World Precious Minerals Fund 0.51%); Harmony Gold (Gold and Precious Metals Fund 1.09%, World Precious Minerals Fund 0.98%); Hecla Mining 0.00%; Iamgold (Gold and Precious Metals Fund 0.17%, World Precious Minerals Fund 0.08%); Impala Platinum 0.00%; ishares Core Total US Bond 0.00%; ishares Russell 2000 ETF 0.00%; Kinross Gold (Gold and Precious Metals Fund 0.80%, World Precious Minerals Fund 0.10%); Newcrest Mining (Gold and Precious Metals Fund 3.14%); Newmont Mining (Gold and Precious Metals Fund 2.23%, World Precious Minerals Fund 0.43%); Pacific Rubiales (Global Resources Fund 0.08%); Pan American Silver Corp (Gold and Precious Metals Fund 1.23%, World Precious Minerals Fund 0.05%); Petrominerales (Global Resources Fund 0.20%); Randgold Resources (Global Resources Fund 1.97%, Gold and Precious Metals Fund 1.81%, World Precious Minerals Fund 1.13%); Royal Gold (Gold and Precious Metals Fund 0.75%, World Precious Minerals Fund 0.05%); Semafo (Gold and Precious Metals Fund 2.83%, World Precious Minerals Fund 1.27%); Silver Wheaton (Gold and Precious Metals Fund 0.47%, World Precious Minerals Fund 0.35%); SPDR Gold Trust (GLD) (Gold and Precious Metals Fund 3.59%, World Precious Minerals Fund 1.64%); SPDR S&P 500 ETF 0.00%; SPDR S&P Global Natural Resources ETF 0.00%; Talisman 0.00%; Yamana Gold (Gold and Precious Metals Fund 2.76%, World Precious Minerals Fund 1.25%). There is no guarantee that the issuers of any securities will declare dividends in the future or that, if declared, will remain at current levels or increase over time. Note that stocks and Treasury bonds differ in investment objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, and tax features. 62