TORONTO, Nov. 4, 2013 /CNW/ - Mutual funds in Canada that invest in
equities posted strong results in October, as stock markets around the
world showed surprising resilience to negative headlines and risks
involving the political debacle in the United States. All 22 of the
Morningstar Canada Fund Indices that track equity categories posted
increases for the month, including 15 categories that were up by more
than 4%, according to preliminary performance numbers released today by
Morningstar Research Inc. (Morningstar Canada), a subsidiary of
independent investment research provider Morningstar, Inc.
"The reaction of world markets to the events in the United States was
muted, as investors didn't appear to expect a prolonged government
shutdown and discarded the possibility of the U.S. defaulting on its
debt. For the first half of the month, even while the U.S. government
was shut down, most equity fund categories had positive returns,"
Morningstar fund analyst Achilleas Taxildaris said.
"Another implication from the shutdown was the delay of economic data
releases, making it harder to assess the condition of the U.S. economy.
This, combined with the appointment of new Federal Reserve Chairman
Janet Yellen, who is considered a supporter of the accommodative
monetary policy, pushed the possibility of tapering to early 2014. That
action helped both the equity and bond markets to downplay the risk of
a U.S. default, despite the lack of signs of an agreement about raising
the debt ceiling at the time," Taxildaris said.
When an agreement was eventually reached, it was followed by new record
highs for major indexes in the United States and further increases in
markets around the world. "While economists were not impressed when
economic data were finally released, markets chose to focus instead on
the positive earnings results of major U.S. firms such as GE and
Google, leading indices even higher by month-end," Taxildaris said. The
S&P 500 Index (in U.S. dollars) ended the month with a 4.6% increase,
which was bested by the Morningstar U.S. Equity Fund Index's 5% rise as
Canadian mutual funds in that category were helped by favourable
Despite the impressive results by U.S. equity funds, four other
categories did better in October. The best-performing fund indices were
Emerging Markets Equity and Financial Services Equity with increases of
5.6% each, followed by European Equity and Asia Pacific ex-Japan Equity
with 5.2% each. Meanwhile, funds in the Global Equity category
collectively rose 4.6% while International Equity funds were up 4.2%.
Domestic equity funds also had a very strong month, with the Canadian
Equity and Canadian Dividend & Income Equity fund indices both posting
increases of 4.6%, and the Canadian Small/Mid Cap Equity fund index
increasing by 4.4%. The Morningstar Canada Fund Indices that track the
Canadian Focused Equity and Canadian Focused Small/Mid Cap Equity
increased by 4.1% and 3.6%, respectively.
For the seventh time in the past 12 months, the worst-performing equity
fund index in October was Precious Metals Equity, though this month it
managed to eke out a positive 0.2%. Funds in that category have
collectively lost more than 47% during the past year.
"News that China's growth is stabilizing, and the decision of central
banks around the world to hold any rate hikes and maintain
accommodative policy, helped the precious metals equity and natural
resources equity funds achieve positive returns after a weak start to
the month," Taxildaris said.
For more about October 2013 fund performance, go to www.morningstar.ca.
Morningstar Canada's preliminary fund performance figures are based on
change in funds' net asset values per share during the month, and do
not necessarily include end-of-month income distributions. Final
performance figures will be published on www.morningstar.ca next week.
About Morningstar Research Inc. and Morningstar, Inc.
Morningstar Research Inc. is a Canadian subsidiary of Chicago-based
Morningstar, Inc., a leading provider of independent investment
research in North America, Europe, Australia, and Asia. The company
offers an extensive line of products and services for individual
investors, financial advisors, and asset managers, and retirement plan
providers and sponsors. Morningstar provides data on approximately
437,000 investment offerings, including stocks, mutual funds, and
similar vehicles, along with real-time global market data on more than
10 million equities, indexes, futures, options, commodities, and
precious metals, in addition to foreign exchange and Treasury markets.
Morningstar also offers investment management services through its
registered investment advisor subsidiaries and has approximately US$176
billion in assets under advisement or management as of Sept. 30, 2013.
The company has operations in 27 countries.
©2013 Morningstar, Inc. All rights reserved.
SOURCE: Morningstar Research Inc.
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