2014

Another Strong Showing for Foreign Equity Funds in February, Morningstar Canada Data Show

TORONTO, March 4, 2013 /CNW/ - February was yet another month of exceptional returns for foreign equity funds sold in Canada, while most balanced, fixed income and domestic equity fund categories also posted strong gains. Thirty-seven of the 42 Morningstar Canada Fund Indices had positive results for the month, including increases of more than 3% for seven of the 24 equity fund categories, according to preliminary performance data released today by Morningstar Canada.

The top-performing fund indices for the month were those that target Asian equities. The Morningstar Asia Pacific Fund Index was best overall with a 4.6% increase, followed by Japanese Equity with a 4.5% increase. The Asia Pacific ex-Japan Equity index ranked fourth with a 3.9% increase. Gains in the region came in large part from Japanese and Korean equities, with the Nikkei and KOSPI indexes increasing by 3.8% and 3.3%, respectively, when measured in local currency terms. Currency effects also played a large part in the positive returns for Canadian investors, with the Chinese renminbi, Japanese yen, Hong Kong dollar and South Korean won all gaining ground versus the Canadian dollar.

Funds in the U.S. Equity and U.S. Small/Mid Cap Equity categories also continued their strong run, with increases of 3.1% each for the two fund indices that track these categories. This reflected both a market increase and the loonie's 2.8% depreciation against the U.S. dollar during the month. Meanwhile, the Morningstar European Equity Fund Index, another high flyer in recent months, posted an increase of 0.8%-- its worst performance since July 2012.

"After a period of relative calm in the eurozone, the Italian election late in the month drove investors out of the markets, as no party came away with a parliamentary majority. The election raised fears that austerity measures proposed by the previous government would not survive, and markets worldwide tumbled as a result," said Morningstar Fund Analyst Adam Fisch. "However, in the last three days of the month most markets made up for earlier losses, and markets in Europe, Asia and North America ended positively overall."

As has been the trend for several months, Canadian equities posted strong gains in February, led by the financial services sector, but domestic equity funds failed to keep pace with their foreign counterparts. The Morningstar Canada Fund Indices that track the Canadian Focused Equity, Canadian Dividend & Income Equity, and Canadian Equity categories increased by 1.9%, 1.9%, and 1.5%, respectively, surpassing the benchmark S&P/TSX Composite Index's 1.3% total return. Funds that target smaller companies did not fare as well, with the Morningstar Canadian Focused Small/Mid Cap Equity Fund Index increasing by 0.7% and the Morningstar Canadian Small/Mid Cap Equity Fund Index posting a decrease of 0.4%.

Only three other equity fund indices were in negative territory for February: Greater China Equity (-0.7%), Natural Resources Equity (-4.1%), and Precious Metals Equity (-10.9%). This marks the fourth consecutive month where precious metals funds have been the worst performers, while natural resources funds have also finished near the bottom during the same period. "Drops of more than 5% in the price of oil and more than 11% for gold in February meant struggles for producers in those categories. Investors have shown some optimism about the U.S. economy, which tends to lead to upticks in oil consumption and prices, but an American surplus in oil has tempered that reaction so far this year," Fisch 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 Research Inc. and Morningstar, Inc.
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 416,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 9 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries and has approximately US$149 billion in assets under advisement or management as of Dec. 31, 2012. The company has operations in 27 countries.

SOURCE Morningstar Research Inc.



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