TORONTO, Jan. 29 /CNW/ - Morningstar Research Inc., a Canadian subsidiary of Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported a summary of institutional pooled fund performance in Canada for the fourth quarter of 2009. For the third consecutive quarter, an overwhelming majority of the pooled funds in the company's Canadian database had positive returns; 906 out of 1,033, or 88%, posted gains for the quarter, including 535 of 574, or 93%, of equity-focused funds.
Thirty-nine of the 41 Morningstar Canada Pooled Fund Indices were up for the quarter. These fund indices measure the asset-weighted average return of all funds within a category. Eight of the indices returned more than 5% over the three-month period, with three of them gaining 10% or more. The best-performing fund index was the one that tracks the Precious Metals Equity category, whose sole constituent fund, Goodman Precious Metals Equity, gained 13.2%. That fund started the quarter with a 3.8% loss in October, which it followed with an industry-best 17.3% gain in November, before posting a flat 0.3% return in December.
Pooled funds that allocate significant portions of their portfolios to natural resources did particularly well in the fourth quarter. The Canadian Small/Mid Cap Equity pooled fund index, with a combined weight of 47.3% in the energy and materials sectors, ranked second with a gain of 11.3%, while the Canadian Focused Small/Mid Cap Equity index (45.6% in resources) was third with a 10.4% gain. The index that tracks the Natural Resources Equity category was fourth with a 9.8% gain, while Income Trust Equity (36.5% in resources) was fifth with 7.3%. Of the 56 pooled funds that comprise these five categories, 35 posted double-digit gains for the quarter. The best performer with an 18.8% gain was Desjardins MB Canadian Small Cap Equity, while the worst was Floyd Growth, up 3.4%.
The fund index that tracks the Canadian Equity category - the largest among all equity pooled fund categories in terms of both number of funds and assets under management - gained 3.9% in the fourth quarter. Returns among the 137 funds in that category ranged from 1.0% for Kingwest Canadian Equity Portfolio to 9.8% for RBC Private O'Shaughnessy Canadian Equity Pool.
Among the three largest foreign equity categories, the U.S. Equity pooled fund index gained 3.6% for the quarter, ranking 17th overall, while Global Equity returned 3% (ranking 21st), and International Equity was up 0.5% (ranking 36th). The best-performing individual foreign fund was Goodman U.S. Equity Growth Currency Neutral, up 15.9%. The only equity-based pooled fund index to lose ground in the fourth quarter was Japanese Equity with an 8.8% loss. This essentially matches the return of the larger of the category's only two funds, Burgundy Asian, which was also the worst performer among all individual funds for the quarter.
Morningstar Canada publishes performance figures for pooled funds through Morningstar(R) Principia(R) for Pooled Funds, the company's pension fund research and presentation tool, and through its global institutional research platform, Morningstar Direct(TM). Both platforms deliver comprehensive analysis for more than 1,000 Canadian institutional investment funds, as well as hundreds of market indices, benchmarks, averages, and medians. This extensive coverage of the Canadian institutional fund market is complemented by Morningstar's unique holdings database.
Morningstar Ratings Update
As of Dec. 31, 2009, three pooled fund sponsors have six mandates each earning a 5-star Morningstar Rating: Beutel Goodman & Co. Ltd., Goodman & Co. Investment Counsel Ltd. and Mawer Investment Management Ltd. QV Investors Inc. has the second highest total with four funds rated 5-stars. About 81% of the 1,033 pooled funds in Morningstar's database currently receive a Morningstar Rating.
The Morningstar Rating(TM) is an objective, quantitative measure of a fund's historical risk-adjusted performance relative to other pooled funds in its category. Only funds with at least a three-year track record are considered. Funds are rated on the basis of three-, five-, and 10-year track records, as available, which are then combined for an overall rating. A fund can only be rated if there are a sufficient number of funds in its peer group to allow comparison for at least three years.
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 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: Christian Charest, Associate Editor, Morningstar Canada, (416) 484-7817