Following up on a thought in my recent article in which we noted that on a five-year time frame, investment in Exxon (NYSE:XOM) common stock would have given the conservative investor more pricing stability and a better rate of return than the leading Energy-related mutual fund, here are some additional price charts.
I compared XOM common stock with four leading energy-related mutual funds, per this article, plus the remaining other giant fund that specializes in this industry. I have obscured the actual fund names from the graph but will provide them on request.
It is quite true that since this time in 2009, the mutual funds appear to have done better: XOM common stock is the blue line below.
On the one-year chart, XOM common stock is mid-herd, benefiting like all stocks in general and oil stocks in particular from the quantitative easing, and the ongoing commodity "bubble.".
But on the five year chart you can immediately see why.
During the 2008 collapse, XOM "didn't". Three of the five of these funds are still giving a negative five-year return, the remaining two not as good as simply investing in XOM common stock and sitting on it.
I would also point out that one of the five has a 5% front end load, further reducing the rate of return for the conservative investor.
So, the prospectus and one-year returns notwithstanding, the argument can be made against the ostensibly safer and more diversified mutual funds, and in favor of XOM.
Additional Information: Chevron (NYSE:CVX) actually performed a little better than XOM during the five year time frame. Note that Shell (NYSE:RDS.A) and BP (NYSE:BP) were not so fortunate, BP in large part because of the oil spill disaster, and ConocoPhilips (NYSE:COP) is somewhere in between. But an investment in these two oil majors would have been better and safer than the professionally managed mutual funds for this industry.
Do with this information what you will, keeping in mind that past performance does not necessarily apply to future results, and that we are in uncharted territory on several fronts.
Disclosure: I am long CLMT. Sadly, I also have some 401K money in two of the five of the mutual funds in the above graph. I am inclined to let them run for awhile, until the five-year return for the funds equals that of XOM or CVX, and at that time, switch to the safer and better-returning individual stocks.