Last-Minute Rally Rescues Funds in November, Morningstar Canada Data Show
December 02 2011 - 7:00AM
PR Newswire (Canada)
TORONTO, Dec. 2, 2011 /CNW/ - Investment funds in Canada were
heading for yet another disastrous month until the final days of
November, when key economic announcements triggered a wave of
renewed optimism. Only seven of the 22 Morningstar Canada Fund
Indices that track equity categories had positive returns for the
month, but most of those that were in the red lost less than 1% at
month-end, according to preliminary performance data released today
by Morningstar Canada. "Investors who didn't pay attention in the
last three days of November would be shocked to see how much can
change over such a short time," said Morningstar Fund Analyst
Salman Ahmed. "The S&P/TSX Composite shot up 6.5% while the
S&P500 was up 4.5% (in Canadian dollar terms). The S&P 500
returns would have been higher for Canadian investors were it not
for the loonie's rise versus the U.S. dollar during that time. This
is in stark contrast to how the market performed during the first
27 days of the month, when equity markets were down across the
board." As of Nov. 27, the Morningstar Canadian Equity Fund Index
was looking at a 6.3% loss for the month to date, but following the
month-end rally the funds in that category ended the month with
just a 0.5% loss. Similarly, the fund index that tracks the U.S.
Equity category closed the books on November with a 1.1% gain even
though just three days earlier its month-to-date return was a 4.2%
loss. "The rally was largely attributable to easing concerns over
Europe. Reports of a rescue plan for Italy, which were quickly
dismissed by the International Monetary Fund as false, triggered a
show of confidence that governing bodies would be able to
coordinate a plan of action. The market was rewarded with the
announcement that central banks worldwide would work on a
coordinated effort to provide liquidity," Ahmed said. Excluding
sector-specific categories, the only other equity-based Morningstar
Canada Fund Indices to post gains in November were U.S. Small/Mid
Cap Equity with 1.5%, North American Equity with 0.4% and Japanese
Equity with 0.2%. There was an unusually eclectic mix of fund
categories at the top of the performance table that also featured
the Health Care Equity, 2025+ Target Date Portfolio, and Real
Estate Equity fund indices, with gains of 1.5%, 1.4%, and 1.3%,
respectively. The top performer for the month was the Morningstar
Canadian Long Term Fixed Income Fund Index with a 2.3% return. One
of the worst performers in November was the fund index that
measures the Financial Services Equity category, which lost 3.6%.
"Investors continue to be skeptical regarding banks. Their sharp
rally over the last few days dampened what was otherwise dismal
performance. Adding to investors' woes was a downgrade of numerous
corporate credit ratings by rating agency Standard & Poor's.
Bank of America, Goldman Sachs, Citigroup, and JPMorgan in the
United States, along with UBS, Barclays, and HSBC were all
downgraded," Ahmed said. For more on November 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 products and services for individuals,
financial advisors, and institutions. Morningstar provides data on
approximately 330,000 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 more than $167 billion in assets under
advisement and management as of Sept. 30, 2011. The company has
operations in 26 countries. Morningstar Research Inc. CONTACT:
Salman Ahmed, Fund Analyst, Morningstar Canada, (416)
484-7823;Christian Charest, Editor, Morningstar Canada, (416)
484-7817
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