TORONTO, April 2, 2014 /CNW/ - Equity funds in Canada displayed mostly positive performance in the first quarter of 2014, with the bulk of the gains coming in February while January and March results were mostly flat. All but one of the 21 Morningstar Canada Fund Indices that measure the aggregate returns of equity funds were up during the quarter, with 13 of the indices increasing by 4% or more. Fixed-income funds were also in positive territory for the quarter, with most of their gains coming in January, according to preliminary performance data today released by Morningstar Canada.
Though it was the worst performer in March with a 7.9% decrease, the Morningstar Canada Fund Index that tracks funds in the Precious Metals Equity category ended the first quarter at the top of the table with an increase of 19.3%, owing to double-digit increases in January and February.
"As the U.S. economy gained traction and geopolitical tension subsided, the price of precious metals such as gold and silver dropped in March after a run-up in the first two months of the year," Morningstar Fund Analyst Joanne Xiao said.
Funds in the newly created Energy Equity category, which were previously included in the Natural Resources Equity category, were the best performers in March with an average gain of 4.4% and were third-best for the quarter with a 9.7% increase. The Morningstar Natural Resources Equity Fund Index, whose constituent funds combine energy and materials (including precious metals) stocks, was the second-best performer for the quarter with an 11.5% increase.
Among sector-diversified fund indices, the best performers for the quarter were those that track three small- and mid-cap categories: Canadian Focused Small/Mid Cap Equity, Global Small/Mid Cap Equity, and Canadian Small/Mid Cap Equity, which increased by 6.7%, 5.9%, and 5.8%, respectively.
Helped by its large holdings in natural resources, the Canadian Equity fund index had three positive months and ended the quarter with an increase of 5.3%, ahead of European Equity (5.2%), U.S. Equity (4.1%), Global Equity (3.9%), and International Equity (2.8%).
The only fund index in negative territory--and the worst performer for the quarter--was Greater China Equity with a 3.9% decrease. The index was also the second-worst performer for the month of March with a 4% decrease. Second from the bottom of the performance table for the quarter was the Asia Pacific ex-Japan Equity Fund Index with a 0.0% return. The Asia Pacific Equity and Emerging Markets Equity fund indices did better, each increasing by 2.8%.
"Slowing economic growth in China, which had its first-ever corporate bond default in March, combined with the weakening of the Chinese currency, has weighed on the local stock market. Despite the weakness in China and Russia, emerging-markets funds delivered decent results in general, helped largely by gains in Brazil and India," Xiao said.
For more information about March 2014 fund performance, please visit www.morningstar.ca.
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 www.morningstar.ca 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 446,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 10 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 registered investment advisor subsidiaries and had approximately US$159 billion in assets under advisement or management as of Dec. 31, 2013. The company has operations in 27 countries.
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SOURCE: Morningstar Research Inc.
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