Fund Returns Mostly Positive in August, Morningstar Canada Data Show

TORONTO, Sept. 2, 2016 /CNW/ -- Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ: MORN), today released preliminary August 2016 performance data for its 44 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories.

Most Canadian investors experienced modest gains in their fund holdings last month as only four of the 44 Fund Indices–all in sector equity categories and with relatively few assets–had negative returns.

In the developed markets including Canada, fund index returns in the major diversified equity categories were mostly between 0.5% to 1%, led by European Equity, returning 1.1%., with Global Equity not far behind at 0.9%. Canadian Equity returned 0.7%, International Equity 0.6%, and U.S. Equity 0.5%.

Investors were generally rewarded for taking equity or equity-like risks in August, which was also reflected in fixed-income categories. The best-performing indexes–High Yield Fixed Income and Preferred Share Fixed Income, both returning 1.3%--are the most closely correlated with equities. By comparison, the Canadian Fixed Income, Canadian Long Term Fixed Income, and Canadian Short Term Fixed Income indices languished with barely positive returns. Faring somewhat better was Global Fixed Income, which was up 0.4% during a month when the Canadian dollar slipped about half a cent in value versus its U.S. counterpart.

Additional highlights from Morningstar's August 2016 preliminary performance report include:

  • Last month's top performer among the 44 Morningstar Fund Indices was Greater China Equity, up 6.7%. Investor enthusiasm was sparked by the Chinese government's announcement in August that it intends to implement a stock-trading connection between the Hong Kong and Shenzhen stock exchanges, which will improve access by foreign investors to stocks listed on the technology-heavy Shenzhen exchange. It was generally a good month for investors in developing markets, as the Asia-Pacific ex-Japan Equity and Emerging Markets Equity indices gained 1.6% and 1.4%, respectively.
  • In the sector-equity categories, the standout performers in August were Energy Equity and Financial Services Equity. Both indexes returned 3.9%, trailing only the Greater China Equity Index. Buoyed by rising oil prices in August, energy was the top performer of the S&P/TSX sector sub-indexes, though it's off to a rocky start in September. Globally, financial services was the best-performing sector in August, and in Canada the heavily weighted sector benefited from positive earnings surprises at major banks.
  • The worst-performing index last month was the ever-volatile Precious Metals Equity, plunging 13.3%. After rising 29% through the first seven months of this year, bullion prices retreated 3% in August. Slumping gold-mining stocks dragged the Natural Resources Equity Index into negative territory as well, down 2.5%.
  • The two other indexes with negative returns in August were Real Estate Equity and Global Infrastructure Equity, down 3.6% and 0.9%, respectively. These sectors would be among the most affected by an increase in interest rates, which U.S. Federal Reserve Chair Janet Yellen indicated is getting closer in an Aug. 26 speech.

Morningstar Canada's preliminary fund performance figures are based on 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 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 individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 18 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 investment advisory subsidiaries, with more than US$185 billion in assets under advisement or management as of June 30, 2016. The company has operations in 27 countries.

Media Contact:
Rudy Luukko, +1 416-484-7825 or

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SOURCE Morningstar Research Inc.

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