TORONTO, Dec. 4, 2012 /CNW/ - Equity funds in Canada focused on domestic
equities posted negative returns on average in November, dragged by a
struggling natural resources sector. Meanwhile, foreign equity funds,
particularly those investing in Asia and Europe, had another month of
positive results. Overall, 32 of the 42 Morningstar Canada Fund Indices
showed increases in November, including 16 of the 24 indices that
measure the performance of equity fund categories, according to
preliminary numbers released today by Morningstar Canada.
The best-performing fund index for the month was the one that tracks the
Financial Services Equity category, which increased by 2.2%. "This
relatively small fund category hinges heavily on the performance of the
big Canadian banks, which rose in the second half of November on
expectations of positive earnings results. RBC announced its results
toward the end of the month, while the others will report in the coming
weeks," said Morningstar Fund Analyst Adam Fisch.
At the other end of the performance spectrum were the Natural Resources
Equity and Precious Metals Equity categories, whose representative fund
indices decreased by 4.3% and 9.2%, respectively. "In the days
following the U.S. election, renewed fears about the so-called fiscal
cliff led to a drop in the markets, from which more volatile sectors
like precious metals and natural resources are yet to recover. Precious
metals funds were also hurt by some company-specific news within the
gold sector; Barrick Gold revised its guidance toward the low end of
expectations, while IAMGOLD results missed analysts' expectations,"
Diversified Canadian equity funds benefited from the strength of the
financial services sector, which accounts for 31% of the S&P/TSX
Composite Index, but the poor showing by the energy and materials
sectors—the main components of natural resources funds—resulted in
decreases for all five of the broader domestic equity fund indices. The
Morningstar Canadian Dividend & Income Equity Fund Index, whose
constituent funds are the least reliant on resources and typically
contain generous helpings of financials, was the best performer in that
group with a 0.1% decrease for the month. The Morningstar Canadian
Focused Equity Fund Index, with its higher exposure to U.S. equities,
also did relatively well with a 0.2% decrease, while the purely
domestic Morningstar Canadian Equity Fund Index was down 1%. The fund
indices that track the Canadian Focused Small/Mid Cap Equity and
Canadian Small/Mid Cap Equity categories, whose funds tend to be tilted
toward resources, were down 1.2% and 2%, respectively, for the month.
Foreign equity funds performed much better than their Canadian
counterparts in November, reflecting solid results in the Asian and
European stock markets combined with muted currency effects. The
Morningstar Asia Pacific ex-Japan Equity Fund Index increased by 1.8%,
while Japanese Equity and European Equity were both up 1.6%, and
International Equity and Asia Pacific Equity both posted increases of
1.5%. "European stocks were buoyed by Germany's approval of Greece's
latest rescue deal, which provided some assurance for investors," Fisch
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.
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 individuals,
financial advisors, and institutions. Morningstar provides data on more
than 385,000 investment offerings, including stocks, mutual funds, and
similar vehicles, along with real-time global market data on more than
8 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 has approximately US$195
billion in assets under advisement or management as of Sept. 30, 2012.
The company has operations in 27 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