TORONTO, May 3 /CNW/ - Solid returns on the major European stock markets
combined with a depreciating Canadian dollar to make investment funds
in the European Equity category the best performers in Canada last
month. Other foreign equity fund categories also gained in April, while
domestic equity funds struggled and ended the month in the red,
according to preliminary performance data released today by Morningstar
Overall, 31 of the 44 Morningstar Canada Fund Indices had positive
returns in April, including 14 of the 24 indices that track equity fund
categories. The best performer, the Morningstar European Equity Fund
Index, gained 5.1% for the month. "Strong corporate earnings from
European firms and impressive manufacturing growth led to broad-based
gains across the region's markets. German companies led the way,
pushing the DAX Index up 6.7% for the month. It was also encouraging to
see robust results from major luxury good manufacturers and retailers
such as LVMH, Burberry, and Christian Dior," said Morningstar Fund
Analyst Nick Dedes.
Also among the leaders were the fund indices that track the
International Equity (2.9%), Asia Pacific ex Japan Equity (2.8%), and
Global Equity (1.8%) categories. Although these funds have exposure to
markets that performed very well last month, currency movements also
played a major part. "Despite the run-up in commodity prices, the
Canadian dollar lost ground against major currencies including the
euro, British pound, and Japanese yen. Some currency experts have
suggested that one reason is the slower growth experienced by our major
trading partner to the south, while other commodity-influenced
currencies like the Australian dollar enjoy strong trading ties to the
robustly growing Chinese market," Dedes said.
One currency against which the loonie did not depreciate was in fact the
U.S. dollar, and this had negative consequences for funds in the U.S.
Equity category. Despite the S&P 500 Index of large U.S. companies
returning a decent 3% last month (when measured in U.S. dollars), the
Morningstar U.S. Equity Fund Index was up only 1.1%, owing in part to
the Canadian dollar's 2.4% rise against its U.S. counterpart.
Domestic equity funds did not have a good month in April, with all six
fund indices posting losses ranging from 0.6% for the Morningstar
Canadian Dividend & Income Equity Fund Index to 1.3% for the
Morningstar Canadian Equity Fund Index. "News of domestic GDP
unexpectedly contracting in February may have weighed down the markets,
along with slower-than-forecast growth for the United States. The
continued strength of the Canadian dollar relative to the U.S. dollar
also remains a burden for many domestic exporters, while at the sector
level, technology and financials struggled significantly. Research in
Motion was punished by investors after lowering its earnings guidance,
and Canadian banks pulled back after a nice run in the first quarter,"
For more on April 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.
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 Internet, software, and print-based
products and services for individuals, financial advisors, and
institutions. Morningstar provides data on approximately 390,000
investment offerings, including stocks, mutual funds, and similar
vehicles, along with real-time global market data on more than 5
million equities, indexes, futures, options, commodities, and precious
metals, in addition to foreign exchange and Treasury markets.
Morningstar also offers investment management services and has nearly
$140 billion in assets under advisement and management as of March 31,
2011. The company has operations in 26 countries.
SOURCE Morningstar Research Inc.
For further information:
Nick Dedes, Fund Analyst, Morningstar Canada, (416) 484-7823; Christian Charest, Editor, Morningstar Canada, (416) 484-7817