TORONTO, March 4, 2013 /CNW/ - February was yet another month of
exceptional returns for foreign equity funds sold in Canada, while most
balanced, fixed income and domestic equity fund categories also posted
strong gains. Thirty-seven of the 42 Morningstar Canada Fund Indices
had positive results for the month, including increases of more than 3%
for seven of the 24 equity fund categories, according to preliminary
performance data released today by Morningstar Canada.
The top-performing fund indices for the month were those that target
Asian equities. The Morningstar Asia Pacific Fund Index was best
overall with a 4.6% increase, followed by Japanese Equity with a 4.5%
increase. The Asia Pacific ex-Japan Equity index ranked fourth with a
3.9% increase. Gains in the region came in large part from Japanese and
Korean equities, with the Nikkei and KOSPI indexes increasing by 3.8%
and 3.3%, respectively, when measured in local currency terms. Currency
effects also played a large part in the positive returns for Canadian
investors, with the Chinese renminbi, Japanese yen, Hong Kong dollar
and South Korean won all gaining ground versus the Canadian dollar.
Funds in the U.S. Equity and U.S. Small/Mid Cap Equity categories also
continued their strong run, with increases of 3.1% each for the two
fund indices that track these categories. This reflected both a market
increase and the loonie's 2.8% depreciation against the U.S. dollar
during the month. Meanwhile, the Morningstar European Equity Fund
Index, another high flyer in recent months, posted an increase of
0.8%-- its worst performance since July 2012.
"After a period of relative calm in the eurozone, the Italian election
late in the month drove investors out of the markets, as no party came
away with a parliamentary majority. The election raised fears that
austerity measures proposed by the previous government would not
survive, and markets worldwide tumbled as a result," said Morningstar
Fund Analyst Adam Fisch. "However, in the last three days of the month
most markets made up for earlier losses, and markets in Europe, Asia
and North America ended positively overall."
As has been the trend for several months, Canadian equities posted
strong gains in February, led by the financial services sector, but
domestic equity funds failed to keep pace with their foreign
counterparts. The Morningstar Canada Fund Indices that track the
Canadian Focused Equity, Canadian Dividend & Income Equity, and
Canadian Equity categories increased by 1.9%, 1.9%, and 1.5%,
respectively, surpassing the benchmark S&P/TSX Composite Index's 1.3%
total return. Funds that target smaller companies did not fare as well,
with the Morningstar Canadian Focused Small/Mid Cap Equity Fund Index
increasing by 0.7% and the Morningstar Canadian Small/Mid Cap Equity
Fund Index posting a decrease of 0.4%.
Only three other equity fund indices were in negative territory for
February: Greater China Equity (-0.7%), Natural Resources Equity
(-4.1%), and Precious Metals Equity (-10.9%). This marks the fourth
consecutive month where precious metals funds have been the worst
performers, while natural resources funds have also finished near the
bottom during the same period. "Drops of more than 5% in the price of
oil and more than 11% for gold in February meant struggles for
producers in those categories. Investors have shown some optimism about
the U.S. economy, which tends to lead to upticks in oil consumption and
prices, but an American surplus in oil has tempered that reaction so
far this year," Fisch said.
For more on February 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 individuals,
financial advisors, and institutions. Morningstar provides data on
approximately 416,000 investment offerings, including stocks, mutual
funds, and similar vehicles, along with real-time global market data on
more than 9 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$149 billion in assets under advisement or management as of Dec. 31,
2012. The company has operations in 27 countries.
SOURCE: Morningstar Research Inc.
For further information:
Adam Fisch, Fund Analyst, Morningstar Canada, (416) 484-7815; Christian Charest, Editor, Morningstar Canada, (416) 484-7817