TORONTO, Oct. 2 /CNW/ - All but two of the 43 Morningstar Canada Fund
Indices suffered losses in September, according to preliminary performance
data today released by Morningstar Canada. The only exceptions were the
indices following the two money market categories.
Equity markets plunged - and investment funds along with them - in the
face of the worsening U.S. credit crisis. The collapse of some former U.S.
financial services titans, which were either sold at fire-sale prices or taken
over by the U.S. government, and the proposed U.S.$700 billion rescue plan
that failed to win the House of Representatives approval on Sept. 29
precipitated some of the biggest single-day losses ever for North American
By the end of the month, the Morningstar US Small/Mid Cap Equity Index
had fallen 11.6%, lagging its broader counterpart, the US Equity Index, which
lost 9.9%. In Canada, funds that focus on small- and mid-cap companies also
fared worse than those investing in the broader market. The Morningstar
Canadian Focused Small/Mid Cap Equity and Canadian Small/Mid Cap Equity
indices lost 19.8% and 18.2%, respectively.
"Access to funding continues to be stifled by the credit crunch, and
small- and mid-sized companies especially are feeling the lending squeeze,"
said Al Kellett, fund analyst for Morningstar Canada.
The worst performer among all categories, however, was the Morningstar
Natural Resources Equity Fund Index, which lost 21.4% as energy issues
plunged. "Much of the downturn can be attributed to lower demand estimates
amid weakening global growth, which led the price of oil to fall by more than
U.S.$10 a barrel in September," Kellett said.
At the same time, weakening resource prices contributed to a loss of
14.5% for the Canadian Equity Index and of 12.1% for both the Canadian Income
Trust Equity and Canadian Focused Equity indices.
Equity funds investing in overseas markets proved to be no shelter from
the U.S.-centered storm. The newest fund index - Morningstar Greater China
Equity - had an inauspicious debut in September, as its 19.8% loss was the
worst among regional funds.
By comparison, the Morningstar Emerging Markets Equity "Index" lost
17.2%, while other funds invested in Asia also reacted sharply to
credit-related fears. The Morningstar index that tracks Asia Pacific ex-Japan
fell 13.3%, while the Japanese Equity Index fell 9.2% and the Asia Pacific
Equity Index lost 10.7%. Meanwhile, the European Equity Index sank 14.8%.
September saw a further decline of 13.5% for the Morningstar Precious
Metals Equity Index, which previously fell 11% in August. "Precious metals
stocks fell despite a 10% rise in the price of gold bullion, as investors
sought a safe haven from plummeting equity prices," Kellett said.
Other industry-sector equity funds were also caught in the market
downdraft. The Morningstar Science & Technology Equity Index sank 15.3%, while
both the Real Estate Equity and Health Care Equity indices lost 7.7%. Despite
the high-profile corporate collapses in the United States, the Morningstar
Financial Services Equity Index had a relatively modest loss of 5.7%.
All indices that track fixed-income fund categories posted negative
returns. The Morningstar Canadian Inflation Protected Fixed Income Index, down
8.6%, was by far the worst performer during the month.
A small drop of 0.8% by the Canadian Short Term Fixed Income Index made
it the leader among fixed-income funds. The two money-market fund indices had
near-zero returns, but that was enough to enable them to lead the pack during
a dismal month.
For more on September fund performance, go to www.morningstar.ca.
Morningstar Canada's preliminary fund performance figures are based on
the 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 Canada and Morningstar, Inc.
Morningstar Canada is the Canadian subsidiary of Chicago-based
Morningstar, Inc., a leading provider of independent investment research. 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 more than 280,000 investment offerings, including
stocks, mutual funds, and similar vehicles. The company has operations in 18
countries and minority ownership positions in companies based in three other
For further information:
For further information: Al Kellett, Fund Analyst, Morningstar Canada,
(416) 484-7879; Rudy Luukko, Investment Funds Editor, Morningstar Canada,