TORONTO, Sept. 3 /CNW/ - August was the second consecutive month of
losses for investment funds that focus mostly on commodities and precious
metals producers, according to preliminary performance data today released by
The Morningstar Precious Metals Equity Index was down 11.3% in August,
making it by far the worst performer among the 42 Morningstar Canada Fund
Indices. It was the second consecutive month in which the index suffered
double-digit losses. Meanwhile, the Morningstar Natural Resources Equity Index
declined by 4.4%, the third-worst performance after the Morningstar Canadian
Focused Small/Mid Cap Equity Index, which was down 4.5%.
The falling price of gold - down about 8% during the month - contributed
to losses in the precious metals category. "Such erratic performance is common
in what has historically been among the most volatile fund categories," said
Jordan Benincasa, fund analyst for Morningstar Canada. In the energy-heavy
natural resources category, oil and gas stocks faltered in the wake of falling
oil prices and expectations of a slowing global economy.
Despite the deepening slump in resources, the Canadian Income Trust
Equity Index gained 5% to lead all other indices, according to preliminary
data. Real estate investment trusts (REITs) and trusts in the industrial
sector more than offset the declines experienced by oil and gas trusts, which
make up a large part of the holdings of funds in the income trust category.
"Strong gains by some widely held trusts in non-resources categories also
helped to keep the category in the black," Benincasa said.
Funds specializing in several other industries - notably technology and
health care - produced robust results in August. The Morningstar Science &
Technology Equity Index returned 4%, just ahead of the Health Care Equity
Index, which was up 3.9%. The indices that track the Real Estate Equity and
Financial Services Equity categories rose by 2.4% and 1.5%, respectively.
Of the industry-diversified equity categories, funds investing in the
United States performed the best. The Morningstar fund indices that track the
U.S. Equity, U.S. Small/Mid Cap Equity, and North American Equity categories
each posted 4.3% returns. By comparison, the Canadian Equity Index returned
"Funds focusing on U.S. equities performed strongly despite a slowdown in
consumer spending and renewed concerns over inflation," Benincasa said.
Currency helped boost returns with the U.S. greenback rising against the
loonie by roughly 2% for the month.
For the most part, foreign equity funds investing outside North America
either barely broke even or lost money last month. The Morningstar
International Equity Index was down 0.4%, while the European Equity Index eked
out a 0.1% gain. Funds investing mainly in Asia and emerging markets were
down, as the Morningstar Emerging Markets Equity Index lost 4% while the Asia
Pacific ex-Japan Equity Index fell by 3.9%.
All six indices that track the fixed-income categories had positive
returns, led by a U.S. currency-assisted 1.1% gain by the Morningstar Global
Fixed Income Index. The laggard was the Canadian Long Term Fixed Income Index,
returning 0.3%. Among balanced categories, the top-performing index was
Canadian Equity Balanced, returning 2%, followed by 1.5% for Global Equity
For more on August 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 280,000 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 other
For further information:
For further information: Jordan Benincasa, Fund Analyst, Morningstar
Canada, (416) 484-7821; Rudy Luukko, Investment Funds Editor, Morningstar
Canada, (416) 484-7825