Download MainStay Cushing® Renaissance Advantage Fund

1Q 2017 FUND COMMENTARY
MainStay Cushing® Renaissance Advantage Fund
Tickers | A: CRZAX | Investor: CRZNX | I: CRZZX
Fund Overview
Quarterly Highlights
Objective
The Fund seeks total return.
Strategy & Process
The Fund invests primarily in U.S. equities
benefiting from the North American shale
revolution and across the entire energy
supply chain. The management team seeks
exposure to companies they believe to be
poised to benefit from increased domestic
crude oil and natural gas production, as well
as exposure to U.S. industrial,
manufacturing, and transportation
companies capitalizing on lower energy
and/or commodity costs compared to
global prices. The team employs deep
"bottom-up" fundamental research to
identify attractive opportunities.
The U.S. Energy Renaissance is a secular
growth theme driven by abundant, cheap
energy in otherwise cyclical industries. The
team believes the U.S. Energy Renaissance
is in the early stages and could fuel many
years of economic expansion in the U.S.
There can be no guarantee that investment
objectives will be met.
▪ For the calendar quarter ended March 31, 2017 (the period), the Fund posted a
total return of -0.8% versus the total return of its benchmark, the S&P 500
Index, of 6.1%.
▪ The Fund benefited from exposure to holdings in the transportation,
midstream, chemicals, and industrials sectors while holdings in the oil services
and exploration and production (E&P) company sectors detracted from
performance.
▪ The impact of the U.S. Energy Renaissance (the resurgence of U.S. companies
benefiting from lower energy prices as compared to global prices) remains
apparent, as the global energy industry landscape has changed significantly
during the current energy commodities price cycle.
▪ We believe a sustained crude oil price recovery in the $50-$60/bbl range and
natural gas prices in the $3-$4/mcf range will be beneficial for the broad energy
sector, as well as industries which use energy commodities as an input cost in
their operations.
▪ The rebound in energy commodity prices and industrial production, along with
an expanding U.S. economy, has the potential to create an environment that
bodes well for industries benefiting from the U.S. Energy Renaissance.
Investment Subadvisor
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MainStay Cushing Renaissance Advantage Fund Commentary
Team Overview
Cushing® Asset Management, LP
Pioneer of innovative U.S. energy
investment strategies.
Jerry V. Swank
Fund Manager since inception
Industry experience: 43 years
Saket Kumar
Fund Manager since inception
Industry experience: 15 years
Matthew A. Lemme, CFA
Fund Manager since inception
Industry experience: 17 years
1Q | 2017
Market Overview & Outlook
The impact of the U.S. Energy Renaissance (the resurgence of U.S. companies
benefiting from lower energy prices as compared to global prices) remains apparent,
as the global energy industry landscape has changed significantly during the current
energy commodities price cycle. We believe the outlook for the U.S. Energy
Renaissance and the opportunities being created by this phenomenon is extremely
encouraging on several fronts. Starting at the origination point driving the U.S.
Energy Renaissance, both crude oil and natural gas prices have remained near or
above price levels that are economically attractive for several industries across the
energy, industrial, and manufacturing value chains. As a result of the inflection in
energy commodity prices, the U.S. industrial sector has rebounded, and industrial
production volumes have steadily increased since early 2016. Natural gas derived
cost tailwinds remained evident in the period, and the buildout of infrastructure
continued at a rapid pace. Natural gas demand also continued to increase, driving
additional infrastructure projects which could benefit the energy, industrial,
manufacturing, and construction value chains. We believe a sustained crude oil price
recovery in the $50-$60/bbl range and natural gas prices in the $3-$4/mcf range will
be beneficial for the broad energy sector, as well as industries which use energy
commodities as an input cost in their operations. We anticipate substantial natural
gas demand growth over the next few years as projects developed to export natural
gas to Mexico and liquefied natural gas (LNG) globally begin to come online.
Looking forward, we believe the Fund is currently positioned to participate in
opportunities across the entire energy value chain and within several industries. We
believe the recent energy commodity price cycle has created attractive value
propositions in many sectors, while the underlying business fundamentals and
prospects for growth appear to remain stable. The rebound in energy commodity
prices and industrial production, along with an expanding U.S. economy has the
potential to create an environment that bodes well for industries benefiting from the
U.S. Energy Renaissance.
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MainStay Cushing Renaissance Advantage Fund Commentary
Fund Performance & Positioning
Portfolio Composition
Common Stocks
83.8%
MLP Investments and Related
Companies*
14.5
Short-Term Investments - Investment
Companies
1Q | 2017
1.7
Subsector Allocation
Industrials
14.3%
Transportation
10.4
Oil & Gas Exploration & Production
8.8
Oil & Gas Storage & Transportation
8.7
Oil & Gas Equipment & Services
8.3
Materials
6.8
Shipping
6.3
Propane
4.7
Natural Gas Gatherers & Processors
4.5
Diversified General Partners
4.2
For the calendar quarter ended March 31, 2017 (the period), the Fund posted a total
return of -0.8% versus the total return of its benchmark, the S&P 500 Index, of 6.1%.
Key Contributors & Detractors
The Fund benefited from exposure to holdings in the transportation, midstream,
chemicals, and industrials sectors while holdings in the oil services and exploration
and production (E&P) company sectors detracted from performance.
The Fund’s transportation sector holdings mainly benefited from increased volumes
and activity in liquefied natural gas (LNG) shipping, as well as the rail industry.
Positive performance in the Fund’s midstream sector holdings was mainly
attributable to increasing production volumes and lower correlation to energy
commodity prices. The Fund’s chemicals and industrials sector holdings continued
to benefit from increasing activity in the energy sector, while also benefitting from
relatively low energy commodity prices. The Fund’s oil services and E&P company
sector holdings detracted from performance during the period, largely driven by a
decline in energy commodity prices. Crude oil prices dropped below $50 per barrel
for the first time since November 2016 during the period, as U.S. producers
increased crude oil production and rig counts rapidly.
Top Holdings
NGL Energy Partners, L.P.
4.8%
Targa Resources Corporation
4.5
Cheniere Energy, Inc.
4.0
Dover Corporation
4.0
CSX Corporation
3.9
Weatherford International Plc
3.9
Jacobs Engineering Group, Inc.
3.8
Energy Transfer Partners, L.P.
3.6
Marathon Petroleum Corporation
3.6
Golar LNG Ltd
3.3
* Certain corporations categorized as MLP Investments
may not qualify or may choose not to qualify as publicly
traded partnerships under the Internal Revenue Code.
Portfolio data as of 3/31/17. Percentages based on total
net assets and may change daily.
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MainStay Cushing Renaissance Advantage Fund Commentary
1Q | 2017
Fund Performance & Positioning (continued)
Fund Statistics
Total Net Assets
$235.9M
Number of Holdings
48
Annual Turnover Rate (%)
314
Average Annual Total Returns
Fund Expenses‡
QTR
Gross
Net
Class A*
1.63 %
1.61%
Investor Class
1.78
1.76
Class I
S&P 500 Index
Class C
2.53
2.51
Class I
1.38
1.36
‡ Gross represents Total Annual Fund Operating
Expenses and Net represents Net (After
Waivers/Reimbursements).
* For the DCIO/RIA markets, Class A shares are available
only to existing Retirement Plans whose Fund schedules
included Class A shares prior to September 30, 2008.
The Annual Turnover Rate is as of the most recent
annual shareholder report.
Class I shares are generally only available to corporate
and institutional investors.
Class A
(NAV)
Period ended 3/31/17
YTD
1 Yr
3 Yrs
-0.83 % -0.83 % 24.61% -2.71%
5 Yrs
10 Yrs
Since
Inception
—
—
3.67 %
-4.52
—
—
2.21
24.98
-2.45
—
—
3.90
17.17
10.37
—
—
—
(max. 5.5% load) -6.28
-6.28
17.76
(no load)
-0.77
-0.77
6.07
6.07
Fund inception: 4/2/2013
Returns represent past performance which is no guarantee of future results. Current performance may be
lower or higher. Investment return and principal value will fluctuate, and shares, when redeemed, may be
worth more or less than their original cost. Performance reflects a contractual fee waiver and/or expense
limitation agreement in effect through 3/31/18, without which total returns may have been lower. This
agreement renews automatically for one-year terms unless written notice is provided prior to the start of the
next term or upon approval of the Board. Visit mainstayinvestments.com for the most recent month-end
performance.
Average annual total returns include the change in share price and reinvestment of dividends and capital gain
distributions. Effective after the close of business 7/11/14, Cushing® Renaissance Advantage Fund was renamed
MainStay Cushing Renaissance Advantage Fund. Performance for Class A and I shares reflect the performance of
the then-existing Class A and I shares of Cushing Renaissance Advantage Fund (which was subject to a different
fee structure) for periods prior to 7/11/14, restated to reflect current sales charges.
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MainStay Cushing Renaissance Advantage Fund Commentary
1Q | 2017
The opinions expressed are those of Cushing® Asset Management, LP as of the date of this report and are subject to change. There is no guarantee that any forecast made
will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment.
Before you invest
Before considering an investment in the Fund, you should understand that you could lose money.
The Fund is non-diversified, meaning it may have a significant part of its investments in fewer individual holdings than a diversified fund. Therefore, the Fund
is more exposed to individual stock volatility than a diversified fund. The Fund's investments will be concentrated in the energy sector and industrial and
manufacturing companies. Thus, the Fund may be subject to more risks than if it were more broadly diversified over numerous industries and sectors of the
economy.
The Fund concentrates its investments in companies in the energy sector. Energy companies are subject to certain risks, including, but not limited to the
following: fluctuations in the prices of commodities; the highly cyclical nature of the energy sector; significant decreases in the production of energy
commodities would reduce the revenue, operating income, and operating cash flows of certain energy companies, and, therefore, their ability to make
distributions or pay dividends; a sustained decline in demand for energy commodities could adversely affect the revenues and cash flows of energy
companies; the energy sector is highly competitive; extreme weather conditions could result in substantial damage to the facilities of certain energy
companies; the profitability of energy companies are subject to significant foreign, federal, state, and local regulation in virtually every aspect of their
operations, and could be adversely affected by changes in the regulatory environment; there is an inherent risk that energy companies may incur
environmental costs and liabilities; certain energy companies are dependent on their parents or sponsors for a majority of their revenues, and any failure by
the parents or sponsors to satisfy their payments or obligations would impact the company's revenues, cash flows, and ability to make distributions; some
energy companies may be subject to construction risk, development risk, acquisition risk, or other risks arising from their strategies to expand operations;
the proposed elimination of specific tax incentives widely used by oil and gas companies, and the imposition of new fees on certain energy producers, could
adversely affect energy companies in which the Fund invests and/or the energy sector generally.
MLPs are subject to certain risks inherent in the structure of MLPs, including tax risks; limited ability to elect or remove management or the general partner
or managing member; limited voting rights, except with respect to extraordinary transactions; and conflicts of interest between the general partner or
managing member and its affiliates, on the one hand, and the limited partners or members, on the other hand, including those arising from incentive
distribution payments or corporate opportunities. Securities purchased by the Fund that are liquid at the time of purchase may subsequently become illiquid
due to, among other things, events relating to the issuer of the securities, market events, economic conditions, investor perceptions, or lack of market
participants. The lack of an active trading market may make it difficult to obtain an accurate price for a security. As a result, an investor could pay more than
the market value when buying Fund shares or receive less than the market value when selling Fund shares. Small- and mid-cap stocks are often more
volatile and less liquid than large-cap stocks. Smaller companies generally face higher risks due to their limited product lines, markets, and financial
resources. Issuers of convertible securities may not be as financially strong as those issuing securities with higher credit ratings and are more vulnerable to
changes in the economy. Funds that invest in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also
subject to credit risk, in which the bond issuer may fail to pay interest and principal in a timely manner. The Fund may experience a portfolio turnover rate of
over 100% and may generate short-term capital gains which are taxable. The investment strategies, practices, and risk analysis used by the Subadvisor may
not produce the desired results.
The investment strategies, practices and risk analysis used by the Subadvisor may not produce the desired results. In addition, the Fund may not achieve its
investment objective, including during a period in which the Subadvisor takes temporary positions in response to unusual or adverse market, economic or
political conditions, or other unusual or abnormal circumstances. The quantitative model used by the Subadvisor, and the securities selected based on the
model, may not perform as expected. The quantitative model may contain certain assumptions in construction and implementation that may adversely affect
the Fund's performance. In addition, the Fund's performance will reflect, in part, the Subadvisor's ability to make active qualitative decisions and timely
adjust the quantitative model, including the model's underlying metrics and data.
The S&P 500® Index is widely regarded as the standard index for measuring large-cap U.S. stock market performance.Index results assume the reinvestment of all capital
gain and dividend distributions. An investment cannot be made directly into an index.
.
MainStay Cushing Renaissance Advantage Fund Commentary
1Q | 2017
For more information about MainStay Funds®, call 800-MAINSTAY (624-6782) for a prospectus or summary prospectus.
Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully
before investing. The prospectus or summary prospectus contains this and other information about the investment
company. Please read the prospectus or summary prospectus carefully before investing.
New York Life Investment Management LLC engages the services of federally registered advisors. Cushing® Asset Management, LP is
unaffiliated with New York Life Investments.
MainStay Investments® is a registered service mark and name under which New York Life Investment Management LLC does business.
MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products
and services. The MainStay Funds® are managed by New York Life Investment Management LLC and distributed by NYLIFE Distributors LLC, 30
Hudson Street, Jersey City, NJ 07302, a wholly owned subsidiary of New York Life Insurance Company. NYLIFE Distributors LLC is a Member
FINRA/SIPC.
©2017 All rights reserved.
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Not a Deposit
May Lose Value
No Bank Guarantee
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