TORONTO, March 4, 2014 /CNW/ - After starting the year with lacklustre
returns in January, mutual funds in Canada that invest in equities
shifted into high gear in February, posting strong gains. All but one
of the 22 Morningstar Canada Fund Indices that measure the aggregate
returns of equity funds were up during the month, with 17 of the
indices increasing by 3% or more. Fixed income funds, which recorded
big gains in January, were relegated to the bottom of the returns table
but remained in positive territory last month, according to preliminary
performance numbers today released by Morningstar Canada.
For the second month in a row, funds in the Precious Metals Equity
category were the top performers in February with an average increase
of 11.4%, owing to solid returns from gold producers. As these stocks
are also major constituents of funds in the Natural Resources Equity,
Canadian Focused Small/Mid-Cap Equity, and Canadian Small/Mid-Cap
Equity categories, the fund indices that measure these categories were
also among the top performers with February increases of 6.6%, 5.4%,
and 4.7%, respectively.
"Investors flocked to gold, viewing it as a safe haven amid turmoil in
emerging markets and recent political tension in Ukraine, and also
after economic growth in the United States missed its fourth-quarter
estimates just as the Federal Reserve began tapering its quantitative
easing program," Morningstar Fund Analyst Vishal Mansukhani said.
Among sector-diversified equity categories, the best-performing fund
index was European Equity with a 5.9% increase in February. The U.S.
Equity category also had a good month with a 4.2% increase, while the
International Equity and Global Equity fund indices were up 4.8% and
3.8%, respectively. The worst performer, and the only index to post a
negative result for the month, was the Morningstar Japanese Equity Fund
Index with a 0.5% decrease. Unlike recent months, currency effects had
little impact on the performance of Canadian-based foreign equity funds
"European stocks were buoyed by a positive outlook for corporate
earnings, supported by improving exports and higher consumer confidence
across the continent, which led to a recovery in domestic demand,"
Mansukhani said. "In the U.S. markets, investors took the decreased
economic growth figures in stride and instead chose to focus on
better-than-expected readings from Chicago Purchasing Managers Index,
which suggested that the U.S. economic recovery continued in February.
Investors also shrugged off declines in consumer confidence from areas
that were most affected by winter storms and severely cold weather
during the last few weeks. Moreover, investors speculated that the
Federal Reserve will continue to maintain monetary support."
In Canada, the three largest stock market sectors—financials, energy,
and materials—all increased by more than 4% last month, which led to
strong returns for diversified domestic equity funds. The Morningstar
Canadian Equity, Canadian Focused Equity, and Canadian Dividend &
Income Equity fund indices increased by 3.7%, 3.6%, and 3%,
"Canadian consumer spending increased, companies added to their
inventories, and the nation's economy accelerated more than expected
last quarter. This led the S&P/TSX Composite Index to post its eighth
straight monthly gain," Mansukhani said.
For more about February 2014 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
446,000 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 had approximately US$159
billion in assets under advisement or management as of Dec. 31, 2013.
The company has operations in 27 countries.
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SOURCE: Morningstar Research Inc.
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