With national and international attention and dollars flowing into the Bakken area, it was only a matter of time before investors wanted their piece of the oil-rich pie.
Unveiled Nov. 10, the Williston Basin/ Mid-North America Stock Fund is an investment option offered by Integrity Mutual Fund, based in Minot, which focuses on investing in companies that are participating or benefiting from the activities and economic development of the area. Natural resources such as oil and gas, coal, ranching and agriculture will be the primary focus of the fund, but other support industries such as potash, banking, transportation, manufacturing, food packaging, and consumer supplies could also be part of the portfolio mix.
Laura Anderson, mutual fund division president for Integrity, said this new fund is the first of its kindfocusing on a particular geographical areaand the uniqueness is turning heads.
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Local investors will now have the opportunity to invest in businesses spanning from services to extraction in the energy rich Bakken and beyond.
"There's been a lot of interest from financial officers as well as individuals, which is unique because most of our contact is from the financial end," she said.
Because of the national attention the Williston Basin has garnered recently and the individual interest of locals, Anderson said for the first time in recent history, Integrity actively marketed to the general public by placing announcements in newspapers in western North Dakota and eastern Montana.
"We thought it would be in the best interest our of clients and the community to reach out directly," Anderson said.
Financial institutions statewide and around the country have also given heed to the frenzy.
"It's exciting to have a fund in this area that deals with energy businesses in the area," said Lavina Domagala, trust manager and senior vice president of First National Bank and Trust in Williston. "A lot of people around here have wanted to get involved, but couldn't afford to put out that much money."
"Before, people around here had to buy individual stocks, which is a lot of money and risk. With this fund, there's lower risk and more people are able to participate," said Amy Wells, trust manager at First National.
The stock sells for roughly $2.50 per share.
"I think it has tremendous potential for growth," said Jeff Case, president of Case Financial Services in Minot. "It's a great opportunity for local investors who don't have a lot of money."
With money on the forefront of most American minds, Anderson said there are investment options available to fit any person's budget.
Traditionally, investors would put forth $1,000 to start or $250 if starting an IRA, but for those who wince at the $1,000 during this time of economic uncertainty, there is a third option: A $50 "monamatic program" which is a, "set it and forget it concept," Anderson said. It is a purchase program where a set amount of money is deducted on a monthly or quarterly basis from the investor's bank account and is invested in the fund. She added that the fund is geared toward long-term growth, so 3 to 5 years would be an ideal investment time period, but a minimum of one year.
Although the Williston Basin concept is new, the fund itself is not.
Acquired by Integrity in 2003, the Small Cap Growth Fund focused on investing in small businesses, but with roughly 9,000 similar mutual funds available, "It made it hard to distinguish and make it unique.... to make it stand out in the public eye," Anderson said.
After several failed attempts to make the fund appeal to investors, Integrity officials decided a change in name and stock direction was the only way to save it.
The conversion of the Small Cap Growth Fund into the Williston Basin/Mid-North America Stock Fund, Anderson said, was the idea of Robert Walstad, founder of Integrity, who saw opportunities in the Williston Basin and a void in stock options. The process, from idea to actualization, started in early 2008 and took nearly a year to complete, she added.
The focus of the fund, which will hold between 25 and 35 stocks, will be natural resources with at least 50 percent of the money invested toward it, although with the volatility of the energy sector, Anderson said they will, "Go all the way through the production lines to capitalize on the activity in the area but provide enough diversification to reduce risk."
In another effort to reduce risk and learn from the oil boom and bust of the 1970s and 1980s in North Dakota, Anderson said the company decided to go beyond the Williston Basin in an effort to avoid the same fate and to have more diverse stock options which would provide better opportunities for profits with less risk.
But in keeping with the name of the region, the fund must invest at least 80 percent of net assets from investors into companies within the Mid-North American corridor, which spans from central Canada south to Texas.
The remaining 20 percent, Anderson said, is an effort to give the portfolio manager leeway to invest in solid companies which operate within the corridor but who may be headquartered outside of it.
These precautionary measures have helped to alleviate some concerns from those involved in the financial realm.
"We (as investment managers) are always concerned with the loss of money, but I'm excited about all of the industriesagriculture, ranching, oil, wind, manufacturingthat encompasses the area and makes North Dakota special and prosperous," Wells said. "It's a great way to invest in our state."
Case said he isn't concerned with the fund because, "They (Integrity) have a good managment record and an especially good rating considering the volatility in the economy."
That good ratinglike stickers on grade school homeworkwas recently awarded by Morningstar, an investment research firm based in Chicago that compiles and analyzes stock, fund and general market information. Case said the Williston Basin Fund recently received four out of five stars for 3-5 year funds, meaning that the fund overall produces average returns with low risk.
"Its a nice pat on the back," Anderson said. "It's recognition that a fund is doing something right."
Although this is the first fund focused specifically at the area, "I wouldn't be surprised (if another was created)....the Williston Basin has gotten a lot of national attention," Anderson said.
"I think this is a concept that will catch on, especially with the energy here and there's more diversity of stock options so you're not limited to one element of the industry," Case said.
Domagala agreed.
"The midcontinent companies make an impact on our everyday life and now people have a great opportunity to participate in something that covers every opportunity in the Midwest."