TORONTO, May 2, 2013 /CNW/ - The month of April once again saw exceptional returns for foreign equity funds sold in Canada, while domestic equity funds found themselves in negative territory. Thirty-three of the 42 Morningstar Canada Fund Indices had positive results for the month, including increases of more than 2% for eight of the 23 equity fund categories, according to preliminary performance data released today by Morningstar Canada.
The top-performing fund index in April was the one that measures the aggregate performance of funds in the Japanese Equity category; it posted a 7.8% increase for the month, extending its winning streak to six consecutive months. Japan's Nikkei 225 Index posted its best one-month return since December 2009 with an 11.8% gain in local currency terms, as the Bank of Japan began implementing its aggressive monetary easing action. The Japanese yen also continued its downward trend, dropping 4.4% versus the Canadian dollar and tempering returns for Canadian investors.
Also among the top performers were the fund indices that track the Asia Pacific Equity, Global Small/Mid Cap Equity, International Equity, and European Equity categories, with increases of 3.2%, 3.1%, 3.0%, and 2.1%, respectively.
"Mixed economic data globally, including positive real GDP growth for the first quarter in the United States and a disappointing decline in Chinese manufacturing, contributed to a volatile month that concluded with most of the major markets showing improvement," said Morningstar Fund Analyst Achilleas Taxildaris. "European equities fared well after a bailout agreement was reached in Cyprus. The expectation that the European Central Bank will cut interest rates also contributed to the performance of European markets."
Domestic equity funds continued to underperform their international counterparts, with all five Morningstar Canada Fund Indices that track Canadian stock categories posting negative monthly returns. The decreases ranged from 0.1% for the Morningstar Canadian Dividend & Income Equity Fund Index to 1.7% for the Morningstar Canadian Equity Fund Index.
"The S&P/TSX Composite Index lost 2.1% last month due to the underperformance of the basic materials sector, which dropped 13.5%. The other two large sectors in the index, financial services and energy, did not provide any support and ended the month with small decreases," Taxildaris said.
For the fifth time in the past six months, the worst-performing fund index was Precious Metals Equity with a decrease of 19.4%--its largest one-month decline since the crash of October 2008. "After a sharp drop to a two-year low, gold managed to slowly recover almost to the US$1,500 mark during the last week of April, for an 8% drop for the month. The news that Cyprus would sell gold reserves in order to raise funds and meet the conditions of its bailout was considered the main reason for the drastic decline, but the renewal of aggressive monetary policies by central banks around the world helped gold's rebound," Taxildaris said.
For more about 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 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 422,000 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$157 billion in assets under advisement or management as of March 31, 2013. The company has operations in 27 countries.
SOURCE Morningstar Research Inc.