TORONTO, March 4 /CNW/ - Investment funds that target the natural
resources sectors more than made up for their poor showing in the first month
of the year by posting strong results in February, according to preliminary
performance data released today by Morningstar Canada. The Morningstar Natural
Resources Equity Fund Index gained 9.8% for the month, which was easily the
best return among the 42 Morningstar Canada Fund Indices.
"Rising prices in commodities like oil, gold and copper have helped
bolster the returns of natural resources and precious metals funds," said
Jordan Benincasa, fund analyst for Morningstar Canada. The Morningstar
Precious Metals Equity Fund Index, the only bright spot amid the generalized
market slide in January, had the second-best return in February with a
6.5% gain as gold prices reached new record highs.
The Morningstar indices that measure the performance of domestic equity
funds all had positive returns in February, with small-cap equity fund
categories outpacing their larger capitalization counterparts. The Morningstar
Canadian Small/Mid Cap Equity Fund Index was up 4.2% for the month, while
Canadian Focused Small/Mid Cap Equity and Canadian Income Trust Equity both
gained 3.7%. The Morningstar Canadian Equity Fund Index was up 3.2%, falling
just shy of the 3.4% return posted by the S&P/TSX Composite Index.
Among foreign equity categories, the Morningstar Emerging Markets Equity
Fund Index had the best return with 3%, thanks in large part to another solid
performance by the Brazilian stock market. The Morningstar Asia Pacific
ex-Japan Equity Fund Index had the only other positive result, up 0.2% on the
strength of stock markets in Taiwan, Hong Kong and South Korea. Meanwhile, the
fund indices that track the larger foreign equity categories all suffered
losses: European Equity was down 1.6%, International Equity shed 2.4% and
Global Equity dropped 3.4%. "Global financial institutions continue to report
massive write downs stemming from business in the collapsing U.S. housing
market," Benincasa said. "Exposure to banks and financial-related firms has
hurt both domestic and foreign equity funds."
The worst performing fund index in February was U.S. Equity with a
5.3% loss, resulting from poor market performance by the S&P 500 Index (down
3.2% in U.S.-dollar terms), combined with a 2.3% appreciation of the Canadian
dollar versus the U.S. currency. "While the Federal Reserve has slashed
interest rates in recent months in an effort to prop up the economy, soaring
commodity, energy and food prices have fuelled fears that inflation is taking
hold just as growth is slowing," Benincasa said. Since the spring of 2007,
when the markets started to take notice of the severity of the credit crunch,
the U.S. Equity fund index has lost more than 20% on a cumulative basis.
For more on February 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 Canada and Morningstar, Inc.
Morningstar Canada 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 260,000 investment offerings, including
stocks, mutual funds, and similar vehicles. The company has operations in
18 countries and minority ownership positions in companies based in three
For further information:
For further information: Christian Charest, Associate Editor,
Morningstar Canada, (416) 484-7817, firstname.lastname@example.org; Jordan
Benincasa, Fund Analyst, Morningstar Canada, (416) 484-7821,