Another Solid Month for Equity Funds in February, Morningstar Canada Data Show
March 02 2012 - 7:00AM
PR Newswire (Canada)
TORONTO, March 2, 2012 /CNW/ - After a strong start to the new year
in January, investment funds in Canada had another solid showing in
February. All but one of the 24 Morningstar Canada Fund Indices
that track equity categories had positive results for the month,
including increases of more than 2% for 18 of them, and all 11
balanced fund indices were also in the black, according to
preliminary performance data released today by Morningstar Canada.
Foreign equity markets generally outperformed their Canadian
counterpart last month, and as a result foreign equity funds
dominated the rankings. The best performer among all Morningstar
Canada Fund Indices was the one that measures the European Equity
category, which rose by 5%. This reflected the impressive returns
posted by the major European benchmarks, notably Germany's DAX
Index, France's CAC40 and the United Kingdom's FTSE 100, which
gained 6.1%, 4.7%, and 3.3%, respectively. Other top-performing
foreign fund indices included Japanese Equity (4.6%), Global Equity
(4.1%), Asia Pacific Equity (4%), and International Equity (4%).
"In Europe, investors were relieved as Greece received its second
tranche of funding," said Morningstar Fund Analyst Salman Ahmed.
"And in Japan, a depreciating yen increased investor confidence in
the ability of manufacturing firms to competitively price their
goods. Even with the yen's nearly 8% depreciation against the
Canadian dollar, Japanese equities were among the best performers
globally for Canadian investors." Among domestic equity funds, the
Morningstar Canadian Equity Fund Index rose by 1.7% in February,
matching the return of the S&P/TSX Composite Index. Funds in
the Canadian Focused Equity category, which can invest up to half
of their portfolios in foreign stocks, did better with an average
gain of 2.4%. Funds that invest in smaller Canadian companies
outperformed large-cap funds, with the Canadian Focused Small/Mid
Cap Equity and Canadian Small/Mid Cap Equity fund indices posting
increases of 4.1% and 3.4%, respectively. The financial services
sector was the main contributor to domestic equity portfolios'
positive returns, with the S&P/TSX Capped Financials Index
rising 3.6%. Financials represent about 29% of the typical fund in
the Canadian Equity category. The second largest sector, energy,
also did well with a 2.3% return. "Increasing tensions between Iran
and Israel pushed up the price of oil during the month. Crude oil
was up more than 9% in U.S.-dollar terms. This helped keep the
energy sector in the black," Ahmed said. The worst performer among
all Morningstar Canada Fund Indices, and the only equity fund index
to finish the month in the red, was Precious Metals Equity, which
decreased by 1.9%. "The precious metals category took a beating in
February largely due to the fall in gold and silver prices on the
last day of the month. Investors interpreted Ben Bernanke's
comments to the U.S. Congress to mean that the Federal Reserve
would not partake in another round of quantitative easing. This
reduced inflation expectations and the prices of precious metals
that serve as inflation hedges," Ahmed said. For more on February
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 375,000 investment offerings,
including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 8 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 US$180
billion in assets under advisement and management as of Dec. 31,
2011. The company has operations in 27 countries. Morningstar
Research Inc. CONTACT: Salman Ahmed, Fund Analyst, Morningstar
Canada, (416) 484-7821;Christian Charest, Editor, Morningstar
Canada, (416) 484-7817
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