Resources Funds Gain in February Amid Overseas Unrest, Morningstar Canada Data Show
March 02 2011 - 7:00AM
PR Newswire (Canada)
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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