The race leader was caught short betting against the Nasdaq while the straggler's patience is paying off at last, writes Caroline Madden

ONCE AGAIN the Rehab Great Investment Race served as an interesting microcosm last month, reflecting the economic and investment trends evident globally.

The stragglers in the charity race capitalised on soaring oil prices to stage a comeback and recover some of the losses sustained in previous months.

Meanwhile the frontrunner, Oppenheim, suffered a setback due to negative sentiment in the solar power market combined with a damaging short position on a rebounding stock index.

AIB Investment Managers' (AIBIM) decision to cut its losses on ailing footwear company Crocs and replace it with Irish exploration company Tullow Oil is proving one of its best moves so far in the competition. The aesthetically-challenged but undeniably comfortable rubber clogs created by Crocs have inspired love and hate in equal measures in consumers, but the company has definitely fallen out of fashion with investors due to poor earnings and sales forecasts. AIBIM fund manager Keith Johnstone explains the rationale behind the decision to cut his losses on Crocs: "Whilst we think that Crocs will survive longer term, we think the share price might be struggling in the next few weeks and months. We took the very difficult decision to sell it ... and switched all the Crocs holding into Tullow Oil.

"That certainly helped to boost the otherwise disappointing performance, because Crocs did cost us quite a lot of money." Tullow Oil benefited in May from record oil prices and its announcement of positive exploration results in Ghana.

The other shares in AIB's portfolio - National Oilwell, Nintendo and Flir Systems - also delivered strong performances, and the fund's return for the month was 13.2 per cent, making it the top performer in May.

However, Johnstone will have to maintain this impressive run of form if he wants to completely eradicate the losses already incurred, as his initial fund of €100,000 stands at a depleted €85,820.

In sharp contrast to AIB's rising fortunes, frontrunner Oppenheim failed to recover its earlier stellar form and had another disappointing month.

Its portfolio has a significant exposure to solar power technology companies, most of which fell significantly in value at the end of May as markets reacted adversely to an unexpected reduction in solar power subsidies by the German government.

Compounding Oppenheim's problems was the poor performance of the Ultrashort QQQ Proshares Fund, a leveraged exchange-traded fund which essentially bets that the value of the Nasdaq 100 index (which comprises 100 US and international non-financial stocks) will fall.

Unfortunately for Oppenheim, the Nasdaq 100 index rose in May, damaging the value of its Ultrashort QQQ holding.

Although its total race fund fell by 4.1 per cent, Oppenheim's stellar performance in earlier stages of the race means that it still retains an easy lead. In fact it remains the only competitor to have made a profit, and its fund is currently worth €215,682.

Bank of Ireland Asset Management's (BIAM) fund manager, Pat Cunningham, has been playing a game of buy-and-hold since the early stages of the competition, and despite heavy losses has held his nerve with a compact portfolio of just four stocks.

In April his patience finally began to pay off, with BIAM producing the strongest performance of all five competitors that month, and his fund was further bolstered in May, growing by another 3.6 per cent.

French company Vallourec, which supplies steel tubing to the oil and gas industry, was the star performer in Cunningham's portfolio last month. Macquarie Infrastructure, which operates toll roads around the world, also performed well. "It trades at a big discount to its underlying value, so I think there was a bit of recognition of that in the month," Cunningham explained.

Although BIAM produced the second best performance in May, it still has a huge amount of ground to make up in the remaining legs of the competition if it wants to move out of the bottom spot in the race. KBC Asset Management managed to reverse its fortunes last month (after shedding 1.6 per cent in April), growing its fund by a respectable 2.2 per cent. However, its initial €100,000 pot has shrunk to €92,660 over the course of the race so far. Irish Life Investment Managers trailed at the back of the pack in May, losing 5.5 per cent. The biggest culprits in fund manager Seamus Magner's portfolio were RBS - its share value fell following a rights issue - and British Energy.

The only stock held over into June was Paddy Power. Although it managed to hang on to second place in the leader board, this loss has plunged Irish Life back into the red, dragging its fund down from €100,472 to €94,910.

So even though Oppenheim suffered another setback in May, its position as leader looks safe for the moment.