The Energy Portfolio

Description              Performance and Statistics           Quarterly Commentary

Investment Management of Virginia’s Energy Portfolio may invest in all areas of the energy industry. The Portfolio has generally focused on the upstream oil and gas industry (exploration and production, drilling, and oil service companies).

The primary reasons to invest in the Energy Portfolio include the potential to generate strong long-term investment returns and the diversification benefits of exposure to the sector. Despite the historic cyclicality of the energy sector, the Energy Portfolio has generated net returns since inception well in excess of those generated by both the S&P 500 Index and the S&P Energy Index. From a diversification perspective, the energy sector in general, and the upstream sector in particular, have historically had a low correlation with the S&P 500 Index and a very low correlation with the NASDAQ Composite Index. This relationship is driven by the fact that high or rising oil and natural gas prices, which are generally a positive for the upstream energy sector, tend to dampen general economic prospects and can be negative for the equity market.

Each Investment Management of Virginia Energy Portfolio account owns basically the same stocks in approximately the same percentages. There are typically 20-25 different stocks in the portfolio. The Energy Portfolio should be considered a highly concentrated investment strategy, and the Portfolio should be expected to be volatile.

The Energy Sector is cyclical and volatile in isolation, especially over short timeframes. Consequently, an investment in the Energy Portfolio should be contemplated only in the context of a diversified portfolio – and on a long-term basis. The main risk to the investment strategy is an extended period of weak, global economic conditions, including weak commodity prices, specifically those for oil and natural gas.

Download the full description of the Energy Portfolio in PDF format here.