Asian Equities Lead Positive First-Quarter 2017 Performance for Funds in Canada, Morningstar Canada Data Show

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Apr 04, 2017, 07:00 ET

TORONTO, April 4, 2017 /PRNewswire/ -- Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ: MORN), today released preliminary March and first-quarter 2017 performance data for its 44 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories. Forty-one of the 44 fund indices increased during the quarter ended March 31, 2017, including 18 indices that increased by 3.0% or more.

Highlights from Morningstar's March and first-quarter 2017 preliminary performance report include:

Asian equity funds posted three consecutive months of solid performance, becoming the top performer in the first quarter of 2017. The Morningstar Canada Fund Index that tracks the Asia Pacific ex-Japan Equity category increased 3.6% in March, bringing its quarterly tally to 11.1%. The Morningstar Greater China Equity Fund Index was the quarter's second-best performer with an increase of 10.8%, followed by Emerging Markets Equity and Asia Pacific Equity, up 10.7% and 9.2%, respectively. Hong Kong's Hang Seng Index was the major contributor to the region's strong returns with a three-month increase of 9.6%, while currency effects were minimal.
The Morningstar European Equity Fund Index started the quarter with a 0.6% decrease in January 2017 but followed up with increases of 2.8% in February and 3.2% in March, leading to a 5.5% increase for the quarter. Funds in the International Equity category, which contain a mix of European and Asian stocks, saw their fund index increase 6.2% for the quarter.
U.S. stocks remained flat in March, as did the funds that invest in them. Both the benchmark S&P 500 Index and the Morningstar U.S. Equity Fund Index increased by 0.1% for the month. But on the strength of their February performance, funds in the U.S. Equity category produced an increase of 4.4% for the quarter. Funds in the U.S. Small/Mid Cap Equity category did not perform as strongly, increasing by 3.6% in the first quarter. The three-month period saw a lot of movement in the exchange rate between the Canadian and U.S. dollars but ended with a less than 1.0% appreciation for the loonie.
In Canada, the S&P/TSX Composite Index had three consecutive months of weak but positive performance, ending the quarter with an increase of 2.4%. The Morningstar Canadian Equity Fund Index followed the same pattern but underperformed the benchmark with a 2.0% increase. The financial services and basic materials sectors were the main contributors, their S&P/TSX sector sub-indexes posting increases of 3.5% and 6.1%, respectively. The energy sector, which suffered heavy losses in January and milder losses in February, was the biggest detractor despite a positive result of 1.8% in March. The S&P/TSX energy sector sub-index was down 9.1% for the quarter.
Funds in the Energy Equity category were the worst performers in the first quarter; the fund index that tracks the category decreased by 9.2%, the result of three consecutive months in the red. The fund index that tracks the Natural Resources Equity category—a mix of energy and basic materials stocks—was second-worst with a 4.1% decrease. These were the only two equity fund indices to finish the quarter in negative territory.
Most fixed-income funds saw light but mostly positive movement during the quarter, with the traditional bond fund indices increasing between 0.7% for Canadian Short Term Fixed Income to 1.8% for High Yield Fixed Income. The Morningstar Preferred Share Fixed Income Fund Index was the best performer among fixed income categories with a 7.9% increase, while Canadian Inflation-Protected Fixed income was the only one in the red, down 1.3%.

To view the complete report about Morningstar's preliminary March and first-quarter 2017 performance data for Canadian funds, please visit http://tr.im/1kkQI.

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 individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than US$200 billion in assets under advisement and management as of Dec. 31, 2016. The company has operations in 27 countries.

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SOURCE Morningstar Research Inc.