TORONTO, Dec. 3 /CNW/ - Investment funds in Canada posted gains across almost all categories in November, in stark contrast to the results from a month earlier in which most of them were in the red. All but one of the 43 Morningstar Canada Fund Indices advanced last month, marking a return to the general upward trend that began in March. The Morningstar Precious Metals Equity Fund Index was by far the best performer with a 17.1% gain, followed by Natural Resources Equity with a 5.5% gain, according to preliminary performance data released today by Morningstar Canada.
"The rise of precious metals was the dominant theme for November. With the continued weakening of the U.S. dollar, governments, pensions, and individuals looked to gold as a diversifying investment, driving its price to record levels," said Neal Brandon, fund analyst for Morningstar Canada. "Central banks-including those of India and Mauritius-purchased significant quantities of gold from the International Monetary Fund, underscoring a shift in confidence toward the precious metal as a reserve asset and reliable store of value. Platinum, palladium, and silver also made gains during the period."
Sector-diversified domestic equity funds generally outperformed their foreign counterparts in November. The Morningstar Canadian Small/Mid Cap Equity Fund Index had the third best return overall with a 5% gain, followed by Canadian Equity with 4.7%. Meanwhile, the fund indices that track the Canadian Focused Small/Mid Cap Equity (4%), Canadian Dividend & Income Equity (3.9%), and Canadian Focused Equity (3.9%) took sixth, seventh, and eighth place, respectively. The main drivers of returns for these funds were the materials and financials sectors; the S&P/TSX Capped Materials Index returned 14.2% for the month, while the corresponding financials index gained 4.4%.
The only fund index to post a negative return in November was Japanese Equity, which lost 4.1%. Japan's Nikkei 225 Index suffered a 6.9% drop during the month, but for Canadian investors this was mitigated by the yen's 3.2% appreciation versus the Canadian dollar. "Japanese equities languished under the weight of declining corporate profitability and the prospect of raising additional capital in the equity markets," Brandon said. "The announcement of a weakened profitability outlook by Sony and capital-raising efforts by leading companies including Mitsubishi UFJ and Hitachi cast doubt on the sustainability of market valuations. The appreciation of the yen was also viewed as a potential drag on export-led corporate sales and profitability."
Elsewhere in Asia, stock markets started the month strongly but faltered in the last week, in large part as a result of damaging developments in Dubai. "The decision by Dubai World, a government-owned investment conglomerate, to seek postponement of debt repayments was a temporary setback to rallying Asian markets, but served as a reminder of the lingering uncertainty and contagion fears in global credit markets," Brandon said. The Morningstar Asia Pacific ex-Japan Equity and Asia Pacific Equity fund indices ended the month with gains of 1.3% and 0.9%, respectively.
For more on November 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.
Morningstar Research Inc. is a 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 325,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 20 countries and minority ownership positions in companies based in two other countries.
SOURCE Morningstar Research Inc.
For further information: For further information: Neal Brandon, Fund Analyst, Morningstar Canada, (416) 484-7821; Christian Charest, Associate Editor, Morningstar Canada, (416) 484-7817