Investment Funds Start the Year on a Negative Note, Morningstar Canada Data
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Global equity markets had a promising start to 2010, but midway through the month government initiatives in
"As a result, equity markets witnessed a partial unwinding of the risk trade in the second half of January, and last year's top-performing fund categories, which are also among the riskiest, suffered," Mickels said. Along with Precious Metals Equity, the biggest decliners were Greater
The Canadian Equity category's loss essentially matched that of Canada's main market benchmark, the S&P/TSX Composite Index, which dropped 5.3%. Among other domestic equity fund indices, losses ranged from 0.4% for the Canadian Income Trust Equity Fund Index to 4.5% for Canadian Focused Equity. Foreign equity funds, though mostly in the red, did not lose as much as their respective benchmarks thanks to the Canadian dollar's depreciation against many of the world's major currencies.
One exception to the equity rout was the Morningstar Japanese Equity Fund Index, which advanced 3.8% despite the Nikkei falling 3.3% for the month. "The gain was made possible by a 4.8% rebound in the yen versus the Canadian dollar, after it had fallen by 8.5% in December," Mickels said. The only other equity fund indices to post gains for the month were Health Care Equity and Real Estate Equity, which returned 1.3% and 0.8%, respectively.
Risk aversion and the decline of equity funds left fixed-income funds to pick up the slack. The Morningstar Canadian Long Term Fixed Income Fund Index was the second-best performer overall with a 2.6% gain, followed by Canadian Fixed Income and High Yield Fixed Income with 1.8% each.
For more on January 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 a Canadian subsidiary of Chicago-based Morningstar, Inc., a leading provider of independent investment research in
For further information: Esko Mickels, Fund Analyst, Morningstar Canada, (416) 484-7815; Christian Charest, Associate Editor, Morningstar Canada, (416) 484-7817
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