The month was all about consolidation. After the very strong fourth quarter in 2010, the market this month was decidedly flat, as investors paused to reflect on 2011. We view the consolidation as healthy, and continue our bullish stance.

The fund returned -0.08% versus the TXS S&P return of 0.99%.

The best performing sectors for the month were health care up 11.95%, energy up 5.28% and, info tech up 4.82%, with the worst performing sectors being materials down 5.43% and consumer staples down 0.54%.

The fund is strongly weighted in bulk commodities such as agriculture, coal and iron ore as well as base metals. Over the last few months the gold position has been greatly reduced in favour of the commodities listed above. As the month has progressed and the gold sell off has accelerated and I am inclined to add to this sector again given the price correction of many of the names and will most likely do this by reducing coal positions, as many of these stocks did well in January given the floods in Australia and fears of supply disruptions.

The oil and gas weight is neutral with a heavy bias towards oil as well energy service companies exposed to horizontal drilling. There is currently very little natural gas exposure. I don’t see this changing in the foreseeable future. I continue to look for opportunities in info tech and industrials, to broaden the funds exposure to the western world recovery.

Given the described fund exposure we fully expect to see a continued global recovery in 2011 with emphasis still on commodities but broadening out to technology and industrials. Examples of such names include Pure Technology, Martinrae International, and Hemisphere GPS.

As the market consolidation continues we view any pull back being an opportunity for those not positioned in equities to buy stocks.

The next hurdle for markets and the commodity leadership of the markets will likely be the start of US monetary normalization, such as when the Federal Reserve starts to raise its benchmark rate and begins talks about unwinding quantitative measures. We do not expect this to happen until at earliest the later part of 2011. Just recently Bernanke was commenting on the need for continued easy monetary policy.

We watch Chinese monetary policy with interest as they try to continue on their growth path albeit at a slightly slower pace so as to keep inflation in check. By increasing rates and making it more onerous for individuals to speculate on real estate, growth is slowing but the Asia economies still look poised for good growth. We believe thus far they are doing a good job. The emerging markets had begun their consolidation earlier than western markets and look as if the process is nearly complete.

Unfortunately volatility doesn’t seem to be going away anytime soon and we expect 2011 to be more of the same, providing opportunities to trade as investors decide between the safety trade and the fear trade.

Something that has remained constant with the fund is our love affair with copper. Supply is tight and demand is strong. The portfolio has a basket of copper names exposing the fund to various geographic areas and a variety of companies at different stages such as exploration, development and production. Some names of focus include Equinox Minerals, Copper Mountain Mining, Anvil Mining, Augusta Resources and Nevada Copper.

Although we are quite comfortable with the current economic environment we continue to watch the economic and political hot spots for any signs of them careening out of control and impacting the recovery in any type of meaningful way.