TORONTO, Nov. 2, 2011 /CNW/ - After five consecutive months of negative returns, equity funds in
Canada produced strong gains in October as general optimism seemed to
return—albeit temporarily—to the world's stock markets. All but one of
the 22 Morningstar Canada Fund Indices that track equity categories had
positive returns for the month, with 14 of them gaining 5% or more,
according to preliminary performance data released today by Morningstar
"Equity markets had one of their biggest months in years, with the
S&P/TSX Composite Index up over 5% and the S&P 500 up nearly 11%. This
was due to positive growth numbers at home, and hopes that eurozone
leaders had created a workable solution to the Greek debt crisis," said
Morningstar Fund Analyst Adam Fisch. "However, the month ended on a
sour note, as a selloff on Oct. 31 was followed by the surprising
announcement of a Greek referendum on the proposed bailout. That news,
accompanied by disappointing Chinese manufacturing numbers, sent stocks
downward and cast doubts over the prospect of sustained recovery in the
Foreign markets for the most part outperformed their Canadian
counterpart during the month, but for Canadian fund investors these
solid performances were tempered by currency effects, with the Canadian
dollar appreciating by more than 4 % against the U.S. dollar and many
Asian currencies. As a result, the returns of the Morningstar Canada
Fund Indices that measure foreign equity categories were much lower
than the corresponding market benchmarks when expressed in local
Among the major diversified foreign equity categories, the Morningstar
U.S. Small/Mid Cap Equity Fund Index had the best return with 9%, while
the indices that measure the Emerging Markets Equity, Greater China
Equity and U.S. Equity categories gained 8.1%, 8.1% and 7.3%,
respectively. The International Equity and Global Equity fund indices
both gained 5.4% in October. The worst performer, and the only
Morningstar Canada equity fund index to lose ground last month was
Japanese Equity, which lost 4.1% despite positive results on Japanese
stock markets; this was due to the yen's depreciation of 5.6% against
The best-performing fund index overall was Natural Resources Equity,
which gained 11.3%. "As fears subsided throughout the month, oil and
precious metals rose on hopes of higher demand, buoyed by optimism in
Europe. Production of oil in OPEC countries and in the United States
rose in the month to keep up with anticipated increased demand, but the
prospect of further instability in Europe could derail those plans and
give back many of the month's gains," Fisch said.
Among Canadian equity funds, those that focus on smaller companies edged
out the large-cap offerings. The Morningstar Canadian Small/Mid Cap
Equity and Canadian Focused Small/Mid Cap Equity fund indices gained
7.1% and 6.4%, respectively, while the Canadian Focused Equity and
Canadian Equity fund indices were up 5.7% and 5.6%, respectively.
For more on October 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 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:
Adam Fisch, Fund Analyst, Morningstar Canada, (416) 484-7815; Christian Charest, Editor, Morningstar Canada, (416) 484-7817