This 3-star-rated fund has gained more than 25% year-to-date.
T. Rowe Price New Era (PRNEX)
From Bob Carlson’s Retirement Watch
T. Rowe Price New Era (PRNEX) invests in companies involved in the natural resources industries. Historically, 45% to 55% of the fund has been invested in energy companies
(primarily oil companies) and 25% to 35% in basic materials companies, with the rest usually spread between utilities, industrials and consumer cyclical companies. Recently, the fund has been invested almost 52.5% in energy and 25.5% in basic materials.
The top holdings in the fund are all energy companies: Total, Exxon Mobil, Royal Dutch Shell, Occidental Petroleum and Cimarex Energy. In addition, 78% of the fund was invested in North American-based companies and almost 20% was in European companies.
We bought PRNEX in the belief that the commodity bear market was ending in 2016. The collapse in prices through early 2016 appeared to have reduced production and investment enough that supplies would decline. The investment and production cycle in commodities is long, so it takes a while to ramp them back up.
Modest global economic growth would continue to increase demand for energy and other commodities. Prices for commodities should rise steadily until they rise enough for companies to begin increasing production. Energy also was helped in the last month by plans to reduce production by OPEC and other oil-producing countries. Of course, the election made it more likely that energy companies would face reduced regulations, which was an additional boost.
Bob C. Carlson, Bob Carlson’s Retirement Watch, www.retirementwatch.com, December 2017