European Equity Funds Surge in April, Morningstar Canada Data Show
May 03 2011 - 7:00AM
PR Newswire (Canada)
TORONTO, May 3 /CNW/ -- TORONTO, May 3 /CNW/ - Solid returns on the
major European stock markets combined with a depreciating Canadian
dollar to make investment funds in the European Equity category the
best performers in Canada last month. Other foreign equity fund
categories also gained in April, while domestic equity funds
struggled and ended the month in the red, according to preliminary
performance data released today by Morningstar Canada. Overall, 31
of the 44 Morningstar Canada Fund Indices had positive returns in
April, including 14 of the 24 indices that track equity fund
categories. The best performer, the Morningstar European Equity
Fund Index, gained 5.1% for the month. "Strong corporate earnings
from European firms and impressive manufacturing growth led to
broad-based gains across the region's markets. German companies led
the way, pushing the DAX Index up 6.7% for the month. It was also
encouraging to see robust results from major luxury good
manufacturers and retailers such as LVMH, Burberry, and Christian
Dior," said Morningstar Fund Analyst Nick Dedes. Also among the
leaders were the fund indices that track the International Equity
(2.9%), Asia Pacific ex Japan Equity (2.8%), and Global Equity
(1.8%) categories. Although these funds have exposure to markets
that performed very well last month, currency movements also played
a major part. "Despite the run-up in commodity prices, the Canadian
dollar lost ground against major currencies including the euro,
British pound, and Japanese yen. Some currency experts have
suggested that one reason is the slower growth experienced by our
major trading partner to the south, while other
commodity-influenced currencies like the Australian dollar enjoy
strong trading ties to the robustly growing Chinese market," Dedes
said. One currency against which the loonie did not depreciate was
in fact the U.S. dollar, and this had negative consequences for
funds in the U.S. Equity category. Despite the S&P 500 Index of
large U.S. companies returning a decent 3% last month (when
measured in U.S. dollars), the Morningstar U.S. Equity Fund Index
was up only 1.1%, owing in part to the Canadian dollar's 2.4% rise
against its U.S. counterpart. Domestic equity funds did not have a
good month in April, with all six fund indices posting losses
ranging from 0.6% for the Morningstar Canadian Dividend &
Income Equity Fund Index to 1.3% for the Morningstar Canadian
Equity Fund Index. "News of domestic GDP unexpectedly contracting
in February may have weighed down the markets, along with
slower-than-forecast growth for the United States. The continued
strength of the Canadian dollar relative to the U.S. dollar also
remains a burden for many domestic exporters, while at the sector
level, technology and financials struggled significantly. Research
in Motion was punished by investors after lowering its earnings
guidance, and Canadian banks pulled back after a nice run in the
first quarter," Dedes said. For more on April fund performance, go
to 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
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 390,000
investment offerings, including stocks, mutual funds, and similar
vehicles, along with real-time global market data on more than 5
million equities, indexes, futures, options, commodities, and
precious metals, in addition to foreign exchange and Treasury
markets. Morningstar also offers investment management services and
has nearly $140 billion in assets under advisement and management
as of March 31, 2011. The company has operations in 26 countries.
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http://www.newswire.ca/en/releases/archive/May2011/03/c8716.html p
Nick Dedes, Fund Analyst, Morningstar Canada, (416) 484-7823;
Christian Charest, Editor, Morningstar Canada, (416) 484-7817 /p
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