TORONTO, Aug. 2, 2013 /CNW/ - Most equity mutual funds had a solid start
in the third quarter of 2013 in Canada. Of the 22 Morningstar Canada
Fund Indices that measure the performance of equity categories, 17
increased in July, according to preliminary performance numbers today
released by Morningstar Research Inc. (Morningstar Canada), a
subsidiary of independent investment research provider Morningstar,
Inc.
Positive performances by U.S. and most global equity markets were
largely driven by the comments of U.S. policymakers; in particular, the
Federal Reserve Board's assertion about its plan for the foreseeable
future. Chairman Ben Bernanke's statement, "tapering is not
tightening," —that interest rates are expected to stay low even as the
Fed curbs its bond-buying program-was key to easing market fears.
"The plan to maintain an accommodative policy was supported by similar
messages by central banks around the world," Morningstar Fund Analyst
Achilleas Taxildaris said.
The best regional results were for the Morningstar Canada European
Equity Fund Index, which increased 6.6%, and the U.S. Small/Mid Cap
Equity Fund Index, with an increase of 4.7%. By comparison, with its
broader focus, the U.S. Equity Fund Index was up 3.4% for the month.
The geographically diversified Global Equity and North American Equity
indices also fared well, with increases of 2.9% and 2.6%, respectively.
Among the other top-performing categories, the Morningstar Canada
Canadian Small/Mid Cap Equity Index was up 3.9%, while the Canadian
Equity Fund Index increased 3.1%. Canadian investors benefited from an
appreciating Canadian dollar and higher energy and commodity prices.
"Concerns for the domestic economy are easing, with a soft landing for
the housing market and expectations that Canada will track the
improving U.S. economy over the long term," Taxildaris said.
Slightly more positive results came from the Canadian Focused Small/Mid
Cap Equity, Canadian Focused Equity, and International Equity Fund
Indices, with each rising 3.3% for the month. Funds in the "Canadian
Focused" categories must invest at least 50% and no more than 90% of
their equity holdings in securities domiciled in Canada.
In a sharp reversal from June's results, funds that focus on precious
metals equities posted the biggest increases overall. The Precious
Metals Equity Fund Index had an aggregate increase of 9.6%. "Gold
prices rebounded this month because of renewed expectations for low
rates," Taxildaris said.
While precious metals equity funds significantly outpaced funds in all
other categories, it was also a stellar month for several other
sector-specific funds. The Natural Resources Fund Index increased 3.7%
in the month. The indices for Health Care Equity funds and Financial
Services Equity funds, meanwhile, increased 6.6% and 4.2%,
respectively.
Results were mixed for funds that invest in Asia. While the Morningstar
Canada Greater China Equity Fund Index increased 2.1% amid concerns
about China's slowing economy, the Asia Pacific ex Japan and Asia
Pacific Equity indices had slightly negative results of 0.8% and 1.1%,
respectively.
Japanese equities also slumped in July, in stark contrast to their
robust performance one month earlier when the Japanese Equity index led
all other Morningstar fund indices. "Monetary intervention has resulted
in a much more volatile Japanese yen, which is tracking the ups and
downs of world markets," Taxildaris said. "The recent appreciation of
the yen, combined with a weakening U.S. dollar and mixed Japanese
corporate earnings results, contributed to a late-month plunge for
Japanese markets." The Japan category ended the month with a slight
decline of 0.7% despite increases in the first three weeks of July.
In a month that saw just seven fund indices in negative territory, the
worst result was a 2% decrease for the Morningstar Emerging Markets
Equity Fund Index.
For more about July 2013 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 433,000 investment offerings, including stocks, mutual
funds, and similar vehicles, along with real-time global market data on
more than 10 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$166 billion in assets under advisement or management as of June 30,
2013. The company has operations in 27 countries.
©2013 Morningstar, Inc. All rights reserved.
SOURCE: Morningstar Research Inc.
