TORONTO, Feb. 2, 2012 /CNW/ - The new year began in a very encouraging
fashion for investment funds in Canada, with strong gains being posted
in every equity, balanced and fixed income fund category in January.
All 42 of the Morningstar Canada Fund Indices had positive results for
the month, including increases of more than 2% for each of the 24
equity fund categories, according to preliminary performance data
released today by Morningstar Canada.
The best-performing categories were those that invest in riskier asset
types such as gold, emerging market equities, and small and mid-cap
stocks. The top performer overall was the fund index that tracks the
Precious Metals Equity category, which rose 12.2% for the month. It was
followed by three of the regional equity categories normally considered
among the most volatile: Emerging Markets Equity, Greater China Equity,
and Asia Pacific Ex-Japan Equity, which saw increases of 9.2%, 8.7%,
and 7.1%, respectively. Also faring exceptionally well were the
Canadian Focused Small/Mid Cap Equity, Canadian Small/Mid Cap Equity,
and Global Small/Mid Cap Equity categories, which rose by 6.1%, 5.3%,
and 5%, respectively.
"Widespread strength in riskier asset categories is indicative of
broader macro factors—rather than company-specific events—once again
driving market movements. While there were a number of U.S.-listed
companies that reported estimate-beating earnings, it's likely that
steps toward a solution in Europe and accommodative central-bank
policies had an outsized influence on the month's results," said
Morningstar fund analyst Nick Dedes.
"Specifically, we saw yields on periphery European debt—with the
exception of Portugal—decline as tighter budget controls were broadly
put in place. We also saw the appearance of progress in talks regarding
Greece's debt, and the European Central Bank extending unlimited loans
to banks. In the United States, the Federal Reserve also changed key
language around its intentions for maintaining exceptionally low rates,
which is now likely through late 2014. Meanwhile, Chinese stocks gained
in January likely because of speculation that slowing growth will
prompt a loosening of monetary policy by the country's central bank and
moves by the government to support domestic equities," Dedes said.
While equity funds that target the relatively safer developed markets
underperformed their riskier peers, the corresponding indexes
nevertheless produced higher-than-normal returns in absolute terms in
January. The Morningstar International Equity Fund Index increased by
4.2% for the month, while the indices that measure the U.S. Equity,
Global Equity, and Canadian Equity increased by 4.1%, 4%, and 4%,
respectively. Even the beleaguered European Equity category was up 3.3%
Fixed-income funds also posted gains across the board in January, which
is unusual for a period when all segments of the equity markets do
well. This may indicate that a portion of the investing public has less
conviction in riskier assets and believes it appropriate to leave some
money in the safety of bonds. The returns among the six fixed-income
fund indices ranged from 0.3% for the Morningstar Canadian Short Term
Fixed Income Fund Index to 2% for the Morningstar High Yield Fixed
Income Fund Index.
For more on January 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 products and services for individuals,
financial advisors, and institutions. Morningstar provides data on
approximately 330,000 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
more than $167 billion in assets under advisement and management as of
Sept. 30, 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