Canoe Energy Funds. February 2017

Transcription

1 Canoe Energy Funds February 2017

2 CANOE ENERGY TEAM RAFI TAHMAZIAN Senior Portfolio Manager & Director Lead PM of Canoe Flow-Through Limited Partnerships, Canoe Energy Class & Canoe Energy Income Class mutual funds More than 26 years of oil/gas, investment banking and investment management experience Former Vice Chairman and Managing Director of FirstEnergy Capital Corp. DAVID SZYBUNKA, CFA Associate Portfolio Manager Associate PM of Canoe Flow- Through Limited Partnerships, Canoe Energy Class & Canoe Energy Income Class mutual funds More than 10 years of experience in the energy and financial services sectors Formerly with Calgary -based investment dealer Peters & Co., focused on research and analysis of intermediate and junior oil and gas operators 2

3 The Canoe difference KNOWLEDGE Calgary-based team of energy professionals with a long, successful history in the industry Specific expertise in corporate finance and financial analysis Ability to recognize undervalued situations/trends earlier Positioning our funds ahead of the curve DEAL SOURCING Deep roots in local business community Strong relationships with oil & gas executives formed over decades of business dealings Access to exclusive private/public investment opportunities Favourable allocations on highly sought after equity issues (eg. PrairieSky Royalty, Cardinal Energy, Whitecap Resources) 3

4 Effective risk management Upside Capture Ratio 3 yrs Downside Capture Ratio 3 yrs Upside Capture Ratio 5 yrs Downside Capture Ratio 5 yrs Canoe Energy Cl A Canoe Energy Income Cl A Source: Morningstar Direct, as at January 31, Definition Upside/downside capture ratio show you whether a given fund has outperformed--gained more or lost less than--a broad market benchmark during periods of market strength and weakness, and if so, by how much. Upside Capture Upside capture ratios are calculated by taking a fund's monthly return during months when the benchmark had a positive return and dividing it by the benchmark return during that same month. An upside capture ratio over 100 indicates a fund has generally outperformed the benchmark during periods of positive returns for the benchmark. Downside Capture Downside capture ratios are calculated by taking a fund's monthly return during the periods of negative benchmark performance and dividing it by the benchmark return. A downside capture ratio of less than 100 indicates that a fund has lost less than its benchmark in periods when the benchmark has been in the red. If a fund generates positive returns, however, while the benchmark declines, the fund s downside capture ratio will be negative (meaning it has moved in the opposite direction of the benchmark). 4

5 Buying energy sub-sectors, not stocks Light Oil Cost structures continuing to be right-sized Strong differentiation of winners and losers at US$50/B oil Select companies making accretive deals and accelerating capital, others getting their bank lines right-sized and paying down debt Heavy Oil Crude oil differentials less volatile than last year Significant heavy oil production likely to come online in the next few years due to oil sands projects However, lack of new projects being announced given challenging profitability at today s crude oil price Liquids Rich Natural Gas Condensate pricing has remained strong Natural gas inventory levels in both Canada and the U.S. remain at approximately the 5-year averages Pipeline constraints are the biggest concern for this group, specifically the longer term commitments required to get natural gas out of the Western Canadian Sedimentary Basin (WCSB) Services Utilization levels, margins, day rates ramping Cost control (labor and sand) are the biggest factors impacting margin expansion Producers have demand for additional high horsepower (HHP) on the fence but service companies struggling to find labor, which points to further price increases should commodity levels hold Infrastructure (Pipelines and Midstream)/Utilities Dividends appear safe, but what is the true maintenance capital of these assets? Select areas of the WCSB are being overbuilt (fractionation), while other areas still have an overall lack of infrastructure (processing and gathering) Significant exposure to higher interest rates Other (Renewables/Refiners/Rail/Fertilizer) Refiners spreads on cracks (difference between the purchase price of crude oil and the selling price of finished products) are at average levels Border adjusted tax would be negative for refiners, renewable identification number (RIN) adjustments have the potential to be positive for the group Renewables appear to be gaining momentum Profitability of select renewable areas in question without subsidies, while other areas look much more appealing Commentary provided as at Feb 2017 Percentage of TSX: 20% Number of securities we analyze: 500 5

6 Energy life cycle historical positioning September 2014 International companies Junior/Private companies Service companies February 2017 New equity markets Large/Mid-cap companies September 2015 M&A activity Capitulation Source: Canoe Financial LP 6

7 Getting bullish at the right time +47.2% Canoe Energy Class A Canoe Energy Income Class A +35.4% Source: Morningstar Direct For complete performance periods, see slide 16 7

8 Major energy market influences Technology/Banks Mulitfrac horizontal technology introduced and aggressively implemented Massive funding of producers and services to expand capital programs, production and equipment Valuation pushed higher Politicians Early stage (more questions than answers) Jan 09 Aug 14 Sept 14 Oct 16 Nov 16 -? Speculators/Banks Technology over supplies market, creating opportunity for speculators to drive commodities and markets lower Banks freeze/reduce lending, handcuffing producers 8

9 Energy funds today Cash 20% U.S. exposure 20% Potential import tax risk mitigation Canadian sub-sector approach 40% Privates 10% Bonds 10% As at February 8,

10 Canoe Energy Class A versus stocks Source: Bloomberg. Performance as at February 8, For illustrative purposes only. The graph above illustrates the performance of a sample of individual stocks that form part of the S&P/TSX Energy Index. and are some of the energy stocks the portfolio manager is asked about most frequently. The S&P/TSX Energy Index is the Fund's benchmark. Fund returns are reported net of all management fees and expenses for all series, unlike the returns of the index and individual stocks, which do not pay fees or incur expenses. 10

11 Canoe Energy Income Class A versus stocks Source: Bloomberg. Performance as at February 8, Canoe Energy Income Class performance includes distributions, stocks do not. For illustrative purposes only. The graph above illustrates the performance of a sample of individual stocks that form part of the S&P/TSX Energy Index. and are some of the energy stocks the portfolio manager is asked about most frequently. The S&P/TSX Energy Index is the Fund's benchmark. Fund returns are reported net of all management fees and expenses for all series, unlike the returns of the index and individual stocks, which do not pay fees or incur expenses. 11

12 Superior risk reward profile vs stocks Source: Morningstar Direct The graph above is for illustrative purposes and illustrates the performance of a sample of individual stocks that form part of the S&P/TSX Energy Index. and are some of the energy stocks the portfolio manager is asked about most frequently. The S&P/TSX Energy Index is the Fund's benchmark. Fund returns are reported net of all management fees and expenses for all series, unlike the returns of the index and individual stocks, which do not pay fees or incur expenses. 12

13 Fund codes Fund Series A Series A L/L Series F Initial Sales Charge Option Sales Commission (%) Annual Trailing Commission (%) Low Load Option Sales Commission (%) Annual Trailing Commission (%) Canoe Energy Class GOC501 GOC502 GOC Canoe Energy Income Class GOC2001 GOC2002 GOC Year 1,2,3: 0.50 Thereafter: 1.00 Year 1,2,3: 0.50 Thereafter:

14 Appendix

15 Significantly outperforming benchmark & peers Canoe Energy Income Class A Canoe Energy Class A Morningstar Canadian Energy Equity Category S&P/TSX Capped Energy TR Index +56.7% +56.2% -6.2% -14.5% Source: Morningstar Direct 15

16 Top-performing energy funds CANOE ENERGY CLASS BEST ENERGY EQUITY FUND OVER 3 & 5 YEARS*** 1 Year 3 Years 5 Years Since Inception Canoe Energy Class A* Morningstar Rating Canoe Energy Income Class A** Morningstar Rating 45.1% 1.3% 9.4% 6.3% 39.7% 2.4% 8.8% 9.2% S&P/TSX Capped Energy Index 30.2% -6.5% -3.6% Morningstar Energy Equity Category 29.5% -5.9% -1.3% -6.7%* -3.6%** -3.7%* -1.6%** Source: Morningstar Direct, as at January 31, *The performance commencement date for Canoe Energy Class A is February 18, **The performance commencement date for Canoe Energy Income Class A is January 11, ***Canoe Energy Class was awarded the best energy equity fund for the three-year period ending July 31, 2016 out of a total of 17 funds, and for the five-year period ending July 31, 2016 out of a total of 15 funds. 16

17 Disclaimer The Lipper Fund Awards, granted annually, are part of the Thomson Reuters Awards for Excellence awarded by Lipper, Inc. and highlight funds that have excelled in delivering consistently strong risk-adjusted performance relative to their peers. The Lipper Fund Awards are based on the Lipper Ratings for Consistent Return, which is a risk-adjusted performance measure calculated over 36, 60 and 120 month periods. The highest 20% of funds in each category are named Lipper Leaders for Consistent Return and receive a score of 5, the next 20% receive a score of 4, the middle 20% are scored 3, the next 20% are scored 2 and the lowest 20% are scored 1. The highest Lipper Leader for Consistent Return in each category wins the Lipper Fund Award. Lipper Leader ratings change monthly. For more information, see Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Performance for Canoe Energy Class Series A for the period ended October 31, 2016 is as follows: 21.2% (1 year), 2.5% (3 years), 7.9% (5 years), and 5.5% (since inception on February 18, 2011). The corresponding Lipper Leader ratings of the Fund for the same period are as follows: N/A (1 year), 5 (3 years), 5 (5 years). Morningstar Ratings are based on fund returns for periods ending December 31, 2016 and are subject to change monthly. Morningstar Star Ratings are assigned based on the ranked Morningstar Risk-Adjusted Return of each fund compared to other funds in the same CIFSC Category. Morningstar calculates ratings for the three-, five, and ten-year periods and then the Overall Morningstar Rating is based on a weighted average of Morningstar Ratings for available time periods. Morningstar calculates ratings for categories with at least five funds. If a fund scores in the top 10% of its category, it receives five stars if it falls in the next 22.5%, it receives four stars; the next 35% earns a fund three stars; those in the next 22.5% receive two stars; and the lowest 10% receive one star. For greater detail, see morningstar.ca. This presentation should be read in conjunction with a Fund s Simplified Prospectus. Certain statements contained in this presentation constitute forward-looking statements. The use of any of the words anticipate, continue, estimate, expect, may, will, project, should, believe, objective and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Canoe believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct. Such forward-looking statements included in this presentation should not be unduly relied upon. These statements speak only as of the date of this presentation. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. Except as required under applicable securities laws, Canoe does not undertake any obligation to publicly update or revise any forward-looking statements. The information contained in this report should not be considered as personal investment advice or an offer or solicitation to buy or sell securities. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical and annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution, or optional charges or income taxes payable by any securityholder that would have reduced returns. The indices cites are widely accepted benchmarks for investment performance within their relevant regions, sectors or asset class, represent non-managed investment portfolios, and are not necessarily indicative of future investment returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mr. Rafi G. Tahmazian, Senior Portfolio Manager, is a director of Sulvaris Corp. 17