All Fund Categories Post Solid Gains in January, Morningstar Canada Data Show
February 02 2012 - 7:00AM
PR Newswire (Canada)
TORONTO, Feb. 2, 2012 /CNW/ - The new year began in a very
encouraging fashion for investment funds in Canada, with strong
gains being posted in every equity, balanced and fixed income fund
category in January. All 42 of the Morningstar Canada Fund Indices
had positive results for the month, including increases of more
than 2% for each of the 24 equity fund categories, according to
preliminary performance data released today by Morningstar Canada.
The best-performing categories were those that invest in riskier
asset types such as gold, emerging market equities, and small and
mid-cap stocks. The top performer overall was the fund index that
tracks the Precious Metals Equity category, which rose 12.2% for
the month. It was followed by three of the regional equity
categories normally considered among the most volatile: Emerging
Markets Equity, Greater China Equity, and Asia Pacific Ex-Japan
Equity, which saw increases of 9.2%, 8.7%, and 7.1%, respectively.
Also faring exceptionally well were the Canadian Focused Small/Mid
Cap Equity, Canadian Small/Mid Cap Equity, and Global Small/Mid Cap
Equity categories, which rose by 6.1%, 5.3%, and 5%, respectively.
"Widespread strength in riskier asset categories is indicative of
broader macro factors—rather than company-specific events—once
again driving market movements. While there were a number of
U.S.-listed companies that reported estimate-beating earnings, it's
likely that steps toward a solution in Europe and accommodative
central-bank policies had an outsized influence on the month's
results," said Morningstar fund analyst Nick Dedes. "Specifically,
we saw yields on periphery European debt—with the exception of
Portugal—decline as tighter budget controls were broadly put in
place. We also saw the appearance of progress in talks regarding
Greece's debt, and the European Central Bank extending unlimited
loans to banks. In the United States, the Federal Reserve also
changed key language around its intentions for maintaining
exceptionally low rates, which is now likely through late 2014.
Meanwhile, Chinese stocks gained in January likely because of
speculation that slowing growth will prompt a loosening of monetary
policy by the country's central bank and moves by the government to
support domestic equities," Dedes said. While equity funds that
target the relatively safer developed markets underperformed their
riskier peers, the corresponding indexes nevertheless produced
higher-than-normal returns in absolute terms in January. The
Morningstar International Equity Fund Index increased by 4.2% for
the month, while the indices that measure the U.S. Equity, Global
Equity, and Canadian Equity increased by 4.1%, 4%, and 4%,
respectively. Even the beleaguered European Equity category was up
3.3% last month. Fixed-income funds also posted gains across the
board in January, which is unusual for a period when all segments
of the equity markets do well. This may indicate that a portion of
the investing public has less conviction in riskier assets and
believes it appropriate to leave some money in the safety of bonds.
The returns among the six fixed-income fund indices ranged from
0.3% for the Morningstar Canadian Short Term Fixed Income Fund
Index to 2% for the Morningstar High Yield Fixed Income Fund Index.
For more on January 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: Nick Dedes, Fund
Analyst, Morningstar Canada, (416) 484-7823;ChristianCharest,
Editor, Morningstar Canada, (416) 484-7817
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