Regions

Kopernik Fund moves up with value addition

March 21
3:17 AM 2016

Kopernik Fund is witnessing a total reverse situation on its performance as it's galloping from bottom to the top with soaring valuations. The $682-million Kopenik Global All-C fund grew 15 percent in 2016 so far. This is its best performance as it surpassed 99 percent of its competitors in this space. 

David Iben, mutual fund's chief investment officer, is leading the fund on rising valuations. Iben led the fund from worst to one of the best in mutual fund space as buying in gold, utility, energy and emerging-market companies are propelling it on a good performance.

Energy, gold, utility and emerging-market companies' stocks were hammered down by slump in commodities markets. Growth concerns over emerging economies had also further punished these segments. Buying in these stocks at bottom levels is giving good results. It was behind over 95 percent of its peers for two years and now, it is racing ahead of 99 percent of competitors, as per data compiled by Bloomberg

Iben said "We do the opposite of what the market does and when others are leaving. We are adding positions. We probably were a little early buying the stocks that looked like bargains and we had a challenging time as cheap stocks were getting cheaper and expensive stocks were getting ridiculously expensive, but we knew that sooner or later there will be a turnaround."

Iben's investment strategy of investing in gold, mining and energy sectors pulled Kopernik Fund lower by 20 percent in 2014 and 12 percent further down in 2015. This made Kopernik Fund lagging behind of its all the peers in first year and behind 97 percent of competitors in 2015. 

Materials, industrial and utility stocks are the best performers in MSCI Emerging Markets and MSCI World indices. About 30 percent of Iben's portfolio is in commodities companies as against five percent of MSCI All Country World Index. Industrials and energy stocks account for 30 percent of the fund, while healthcare and consumer stocks are less than one percent. 

Kopernik Global All-Cap A returns on year-to-date (YTD) basis are 1.74 percent while KGGAX training returns on one month basis are 9.19 percent. The trailing returns are negative if calculated on three months and six months basis as they were -1.97 percent and -3.45 percent respectively, according to data from The Mutual Fund Store.

Iben wrote in a note to clients that "it has been a deep, powerful, psychologically challenging bear market. From current depressed valuations, the upside potential is enormous."

As per the MorningStar sustainability rating, Kopernik Fund scored 44 and stood at 96 in percent rank in category. The Fund envisages long-term capital appreciation as it invests in equity securities of US and non-US companies as well. Iben prefers to invest in those stocks that were misperceived and undervalued by the market. 

Iben is a chartered financial analyst (CFA) and has 35 years of experience. He started his career as an analyst at Farmers Group Inc and became a brand himself in early 2000s. He invested in beaten-down commodities companies. During 2006-2011, Iben's Nuveen Tradewinds Value opportunities Fund surpassed the industry average at 78 percent of its peers.

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