TORONTO, Oct. 28 /CNW/ - Morningstar Research Inc., a Canadian subsidiary of Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today reported a summary of institutional pooled fund performance in Canada for the third quarter of 2009. Though the results weren't as spectacular as in the second quarter, they were still overwhelmingly positive, with more than 98% of the 1,065 pooled funds in the company's Canadian database posting gains for the quarter, including all but one of the 592 equity-focused funds.
All 41 of the Morningstar Canada Pooled Fund Indices had positive returns for the quarter. (The fund indices measure the asset-weighted average return of all funds within a category.) Sixteen of the indices returned more than 10% over the three-month period, with five of them gaining 15% or more. The best-performing fund index was the one that tracks the Natural Resources Equity category, which gained 25%. Most of that fund index's gains came in July and September, when it returned 9.8% and 9.9%, respectively.
Pooled funds that focus on smaller Canadian companies did particularly well in the third quarter. The Canadian Small/Mid Cap Equity and Canadian Focused Small/Mid Cap Equity pooled fund indices ranked second and third overall, respectively, with gains of 19.1% and 17.3%. Of the 49 pooled funds that comprise these two categories, 48 posted double-digit gains for the quarter. The best performer with a 25.6% gain was Manulife Canadian Small Cap Equity, followed by Howson Tattersall Canadian Small Cap Value Equity, up 25.2%. Both of these funds are managed by Howson Tattersall Investment Counsel Ltd. and have very similar portfolios. The only fund in these categories to return less than 10% was PH&N Vintage, up 9.8%.
Two other fund indices that track sector-specific categories round out the top five: Real Estate Equity finished fourth with a 16.3% return, followed closely by Precious Metals Equity and its 16.2% gain. It is worth noting, however, that the three top-performing sector-specific categories each contain five funds or fewer.
The fund index that tracks the Canadian Equity category - the largest among all equity pooled fund categories in terms of both number of funds and assets under management - gained 10.1% in the third quarter. Returns among the 141 funds in that category ranged from 7.4% for both Burgundy Focus Canadian Equity and Guardian Canadian Equity, to 21.7% for Montrusco Bolton Quantitative Canadian Equity.
Among the three largest foreign equity categories, the International Equity pooled fund index gained 15.3% for the quarter, ranking 13th overall, while Global Equity returned 10.6% (ranking 19th), and U.S. Equity was up 6.7% (ranking 30th). The best-performing individual foreign fund was PH&N Currency-Hedged Overseas Equity, up 19.3%, while at the bottom the only equity fund in the red was Fidelity Japan, down 3.4%.
Morningstar Canada publishes performance figures for pooled funds through Morningstar(R) Principia(R) for Pooled Funds, the company's pension fund research and presentation tool, and through its global institutional research platform, Morningstar Direct(TM). Both platforms deliver comprehensive analysis for more than 1,000 Canadian institutional investment funds, as well as hundreds of market indices, benchmarks, averages, and medians. This extensive coverage of the Canadian institutional fund market is complemented by Morningstar's unique holdings database.
Morningstar Ratings Update's of Sept. 30, 2009, the pooled fund sponsor with the most mandates earning a 5-star Morningstar Rating is Mawer Investment Management Ltd. with seven funds bearing Morningstar's top rating. Goodman & Co. Investment Counsel Ltd. has the second highest total with six funds rated 5-stars, while Industrial Alliance Insurance and Financial Services Inc. and Hexavest Asset Management are tied for third place with four top-rated funds each. About 80% of the 1,065 pooled funds in Morningstar's database currently receive a star rating.
The Morningstar Rating(TM) is an objective, quantitative measure of a fund's historical risk-adjusted performance relative to other pooled funds in its category. Only funds with at least a three-year track record are considered. Funds are rated on the basis of three-, five-, and 10-year track records, as available, which are then combined for an overall rating. A fund can only be rated if there are a sufficient number of funds in its peer group to allow comparison for at least three years.
Morningstar Research Inc. is a 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 nearly 325,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 20 countries and minority ownership positions in companies based in two other countries.
SOURCE Morningstar Research Inc.
For further information: For further information: Christian Charest, Associate Editor, Morningstar Canada, (416) 484-7817