MORN Morningstar Inc

TORONTO, March 2 /CNW/ -- TORONTO, March 2 /CNW/ - The world's biggest news story in February—growing political unrest in Africa and the Middle East—cast a cloud on most equity markets last month. Although a few industry sectors profited from the fallout, performance was muted for many markets around the world. There were neither losses nor gains in the double digits for any of the 44 Morningstar Canada Fund Indices, according to preliminary performance data today released by Morningstar Canada. "Fears that the violence surrounding pro-democracy uprisings in Egypt and Tunisia would spread to major oil producers were fully realized in Libya, a significant oil exporter to Europe," said Salman Ahmed, fund analyst for Morningstar Canada. As a result, Libyan oil production has been severely disrupted. Although Saudi Arabia has committed to redress the shortfall, the price of Brent Crude, the international benchmark for oil, remained above US$100 a barrel at month-end. Funds that invest in energy producers profited from these events, with the Morningstar Natural Resources Equity Index gaining 5.1% for the third-best ranking among all indices. Also boosted by the energy sector, equity markets in Canada fared better than most: five of the 10 best-performing indices focus on Canadian stocks. A gain of 4.1% gave the Morningstar Canadian Equity Fund Index a fourth-place ranking, while the Canadian Income Trust Equity and Canadian Dividend & Income Equity categories rose 4% and 3.6% to rank fifth and sixth, respectively. Strong performances in the financials sector also boosted the Canadian equity market. Solid earnings results by financial services firms helped push the performance of the Financial Services Equity Fund Index to a 5.7% gain, the second-best result in February. In the United States, the high price of oil led energy stocks to strong returns. The S&P 500 Index gained 0.8% (in Canadian dollar terms), while the Morningstar U.S. Equity Fund Index returned 1.5%. The Canadian dollar, meanwhile, moved above parity with its U.S. counterpart, largely spurred by a better-than-expected trade deficit and higher oil prices. After losing 10.7% as the worst performer in January, the Precious Metals Equity Fund Index rebounded to the top spot, with a return of 7.3%. Gold, which surpassed US$1,400 an ounce, was buoyed by the metal's traditional role as an inflation hedge. The Morningstar European Equity Fund Index, which rose 3.7% and was the second-best performer a month earlier, delivered a small gain of 0.3% in February. "For Canadian investors, a strengthening Canadian dollar negated most positive equity performance in Europe," Ahmed said. Heightened fears about inflation—in particular, uncertainty about how central banks will respond to rising oil and food prices—were also major factors in the sputtering performances of Asian markets. Notably, in China, there are concerns that interest rate increases, aimed at dampening inflation, may put consumer spending and economic growth at risk. The worst performance among all Morningstar Canada Fund Indices came from the Asia Pacific ex-Japan Fund Index, which lost 7.1%. Only slightly better was the Morningstar Greater China Equity Index, which fell 5.1%, while the Emerging Markets and Asia-Pacific Equity categories lost 3.2% and 2.3%, respectively. 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 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 Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 380,000 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 26 countries. To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/March2011/02/c7137.html pSalman Ahmed, Fund Analyst, Morningstar Canada, (416) 484-7821; Rudy Luukko, Editor, Morningstar Canada, (416) 484-7825/p

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