TORONTO, Dec. 3, 2013 /CNW/ - For the third consecutive month, a
majority of equity mutual funds in Canada posted positive results in
November, with funds that focus on China, Japan, and the United States
showing particularly strong numbers. Eighteen of the 22 Morningstar
Canada Fund Indices that track equity categories posted increases for
the month, including 14 categories that were up by more than 2%,
according to preliminary performance numbers today released by
Morningstar Research Inc. (Morningstar Canada), a subsidiary of
independent investment research provider Morningstar, Inc. (NASDAQ:
The best performer among all the fund indices was the one that tracks
the aggregate returns of funds in the Greater China Equity category,
which increased by 6.5% in November.
"Beijing promised the most sweeping economic and social reforms in
nearly three decades, including handing more control over the pricing
of water, electricity, and natural resources to the markets;
liberalising the interest rate and currency regime; and relaxing the
one-child policy," Morningstar Fund Analyst Vishal Mansukhani said.
"The reforms are said to help China shift to an economy that is more
reliant on services and domestic consumption, rather than
The Morningstar Japanese Equity Fund Index was also among the top
performers in November with an increase of 4.3%, its best monthly
performance since April.
"Many of Japan's powerhouse exporters benefited from the yen's weakness,
since buyers with dollars will find it cheaper to purchase electronics
made by export manufacturers like Sony," Mansukhani said.
Funds that invest in U.S. equities did very well last month. The
Morningstar U.S. Small/Mid Cap Equity and U.S. Equity fund indices
increased by 4.5% and 4.1%, respectively, as economic signals suggested
that consumers may be poised to provide a boost to economic growth.
Additionally, investors were relieved by a temporary end to fiscal
battles in Washington, D.C. and appeared to be moderately encouraged by
third-quarter corporate earnings reports.
While stock markets in China and the United States enjoyed strong gains,
Canadian fund investors in these categories also benefited from
favourable currency effects, as the Canadian dollar declined by 1.6%
last month against the U.S. dollar, the Hong Kong dollar, and the
Chinese yuan. The loonie also dropped against the euro by 1.7% and
against the UK pound by 3.4%, which helped the Morningstar European
Equity Fund Index post a 2.7% increase for the month despite lacklustre
market returns in France and the UK.
Domestic equity funds had positive but middling results last month.
However, fund managers were able to add value over their market
benchmarks: the Canadian Equity, Canadian Dividend & Income Equity, and
Canadian Focused Equity indexes increased by 0.9%, 1.1%, and 1.9%,
respectively, beating the S&P/TSX Composite Index's rise of 0.5%.
Meanwhile, the Canadian Focused Small/Mid Cap Equity and Canadian
Small/Mid Cap Equity indexes were up 2.4% and 3%, respectively, both
surpassing the BMO Small Cap Blended Index's 1.9% increase.
Once again, the worst-performing equity fund index in November was
Precious Metals Equity with a decrease of 10.9%.
"Gold declined because of speculation that a strengthening U.S. economy
will warrant less stimulus, which would negatively impact the demand
for gold. After 12 calendar years of gains, gold is set for its first
annual drop in 2013 as some investors may have lost faith in the metal
as a store of value," Mansukhani said.
The other three equity fund indices in negative territory were Emerging
Markets Equity with a 0.6% decrease, Real Estate Equity, down 1.8%, and
Natural Resources Equity, down 2.4%.
"China's infrastructure expansion led the country to become one of the
world's largest consumers of natural resources and raw materials.
However, a move away from infrastructure expansion to a more
consumer-driven economy may mean less demand for natural resources,"
For more on November 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, 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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