China Leads as Equity Funds Post Mixed Results in October, Morningstar Canada Data Show

TORONTO, Nov. 2, 2012 /CNW/ - Equity funds in Canada showed mixed results in October, with those that target Asian and European markets posting positive returns while U.S. and Japanese equity funds were in the red. Meanwhile, those that focus on Canadian equities offered modest gains, according to preliminary performance numbers released today by Morningstar Canada.

The best performer among the 42 Morningstar Canada Fund Indices was the one that tracks the Greater China Equity category, which followed up its impressive 6.2% increase in September with a 5.4% increase last month. "A series of recent small stimulus steps taken by the Chinese government, as well as talk of further and bigger stimulus measures in advance of China's leadership change on Nov. 8, helped fuel this rally," said Morningstar Fund Analyst Joanne Xiao.

In second place, the Morningstar European Equity Fund Index posted its third consecutive monthly increase, rising 2.6%, while the fund indices that track the International Equity, Asia Pacific Equity, and Emerging Markets Equity also did well with increases of 1.9%, 1.6%, and 1.5% for the month, respectively. "Quantitative easing remained the top story in October, and European equities continued to rally on the back of the European Central Bank's bond-buying program," Xiao said.

In the United States, the S&P 500 Index had one of the worst performances among major markets with a 1.9% loss in October, but funds in the U.S. Equity category benefited from the depreciation of the Canadian dollar versus its U.S. counterpart, which mitigated the losses. The Morningstar U.S. Equity Fund Index decreased by 1.3% for the month, which was the second-worst return of all Morningstar Canada Fund Indices. Other fund indices that fell included Japanese Equity and U.S. Small/Mid Cap Equity, with decreases of 0.2% and 0.9%, respectively. Also at the bottom of the table were four sector-specific fund indices: Natural Resources Equity (-0.6%), Real Estate Equity (-0.9%), Precious Metals Equity (-0.9%), and Health Care Equity (-2.1%).

Morningstar Canada's five domestic equity fund indices all had positive results last month, though all ranked in the middle of the pack overall. The Morningstar Canadian Equity Fund Index had the best return with a 1.3% increase, while Canadian Focused Equity, Canadian Dividend & Income Equity, and Canadian Small/Mid Cap Equity posted increases of 1.1%, 0.9%, and 0.3%, respectively. Bringing up the rear, the Canadian Focused Small/Mid Cap Equity Index eked out a 0.1% increase.

"Canadian equities were positive this month thanks to strength in a number of sectors, with the biggest contributions coming from financials and telecommunications. In spite of weakness in commodity prices, the materials sector in Canada was an overall positive contributor for the month," Xiao said.

For more on October fund performance, go to www.morningstar.ca.

Morningstar Canada's preliminary fund performance figures are based on the 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 more than 385,000 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 through its registered investment advisor subsidiaries and has approximately US$195 billion in assets under advisement or management as of Sept. 30, 2012. The company has operations in 27 countries.

SOURCE: Morningstar Research Inc.