TORONTO, June 3 /CNW/ - Natural resources equity and precious metals
equity were the best-performing investment fund categories in May, according
to preliminary performance data released today by Morningstar Canada.
Fuelled by rising energy prices, the Morningstar Natural Resources Equity
Index gained 8.5% last month. "Energy was the story for the month of May,"
said Philip Lee, fund analyst for Morningstar Canada. "Potential supply
disruptions arising from armed conflicts, and fears of political instability
in some of the major oil-producing nations, were among the main drivers for
the monthly advance."
Crude oil, which peaked at a record US$135 during the month, finished the
month at $127.35, up 12.2% from the end of April. During the same period,
natural gas prices rose by 7.9%.
Finishing a strong second among fund indices was the Morningstar Precious
Metals Equity Index, up 6% in May, as the price of gold rose 2.9%. "Higher
energy prices helped bolster the demand for gold because it's often a vehicle
of choice for investors to protect their assets against an increase in
inflation," Lee said. "The rise in the price of bullion gave a boost to gold
Of the five top-performing Morningstar fund indices, the remaining three
were all domestic equities. The Morningstar Canadian Equity Index, whose
S&P/TSX Composite Index benchmark has roughly half of its market
capitalization devoted to resources issues, gained 5.7%.
Rounding out the top five indices were the Morningstar Canadian Focused
Small/Mid Cap Equity and Morningstar Canadian Small/Mid Cap Equity indices,
which rose by 4.7% and 4.3% respectively. Just behind was the Morningstar
Canadian Income Trust Equity Index, up 4%.
Overall, gains outweighed losses by a wide margin for fund investors, as
33 of the 42 Morningstar Canada fund indices produced positive returns. The
rising Canadian dollar eroded the returns of foreign equities. In the largest
such category, the Morningstar Global Equity Index was essentially flat, with
a 0.1% return. The top-performing foreign equity index was the Morningstar
US Small/Mid Cap Equity Index, up 3.5%.
The worst-performing fund indices were the two devoted to Asian equity
markets. The Morningstar Asia Pacific ex-Japan Index lost 2.4%, while the
Morningstar Asia Pacific Equity Index was down 1.9%.
The third worst performer was the Morningstar Global Fixed Income Index,
down 1.7%. This was due primarily to currency-related losses as the Canadian
dollar gained ground against all of the major foreign currencies.
"The demand for Canadian commodity stocks pushed the loonie higher," Lee
said. "Market expectations that the Bank of Canada won't need to reduce
interest rates also got Canadian dollar investors back into the currency."
Most other fixed income indices had either slight gains or losses, except
for the Morningstar Canadian Inflation-Protected Fixed Income Index, which was
For more on May 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 270,000 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
For further information:
For further information: Philip Lee, Fund Analyst, Morningstar Canada,
(416) 484-7824; Rudy Luukko, Investment Funds Editor, Morningstar Canada,