Encouraging rally for equity funds in March, Morningstar data show

    TORONTO, April 2 /CNW/ - Investment funds in Canada gave encouraging
signs that better days may lie ahead, with all 43 Morningstar Canada Fund
Indices posting positive returns in March. In sharp contrast to the two
previous months that were beset by deep and widespread losses, 20 of the 24
fund indices that track equity categories gained 5% or more last month, and
five of them had double-digit returns, according to preliminary performance
data released today by Morningstar Canada.
    "Equities rose for the month as U.S. Treasury Secretary Timothy Geithner
provided more detail on his government's proposal to get toxic assets off the
balance sheets of large banks, and described plans for new, tougher regulation
of capital markets," said Al Kellett, fund analyst for Morningstar Canada.
    While the effects of this renewed confidence were felt worldwide, the
North-American financial services sector was one of the more immediate
beneficiaries. In Canada, the S&P/TSX Capped Financial Index rose 12.9%, while
in the United States the Financials sub-index of the S&P500 did even better
with a 17.7% gain. "Confidence in the financial services sector rose as some
of the largest banks in the United States like Citigroup, Bank of America, and
JP Morgan announced a profitable start to the year," Kellett said. As a
result, the Morningstar Financial Services Equity Fund Index had its best
monthly performance in nearly a decade with a gain of 11.1%, tied for
second-best with the Morningstar Precious Metals Equity Fund Index.
    The top performer among all fund indices in March was Greater China
Equity with a 13.8% gain, reflecting a similar return by the Shanghai
Composite Index and minimal movement between the Canadian and Chinese
currencies during the month. Other emerging markets such as Korea, Taiwan, and
Mexico also posted double-digit gains, leading to strong returns for the
Emerging Markets Equity (10.9%) and Asia/Pacific ex-Japan Equity (10.2%) fund
indices. "The fact that emerging markets gained more than developed countries
is a sign that investors were willing to take on risk again," Kellett said.
    The past month marks the first time since January 2007 that all equity
fund indices were in positive territory. Among the larger categories, Canadian
Equity was up 7.9%, while U.S. Equity, Global Equity, and International Equity
gained 7.2%, 6.2% and 5.9%, respectively. The worst-performing equity fund
index was Japanese Equity, which gained 1.8%.
    The fund indices that measure fixed-income categories had modestly
positive returns that for the most part ranked at the bottom of the
performance table. The lone exception was the Morningstar Canadian
Inflation-Protected Fixed Income Fund Index, which gained 8.8%-its best month
ever. "Investors appeared to become increasingly concerned that massive
stimulus packages would spark a devaluation of paper-based currencies, leading
to gains for real-return bond funds," Kellett said. "The same issue also
benefited precious metals funds, as gold is often considered an inflation
    For more on March 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

    Morningstar Research Inc. 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 300,000 investment offerings, including
stocks, mutual funds, and similar vehicles. The company has operations in 19
countries and minority ownership positions in companies based in three other

For further information:

For further information: Al Kellett, Fund Analyst, Morningstar Canada,
(416) 484-7879; Christian Charest, Associate Editor, Morningstar Canada, (416)

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