Another Solid Month for Equity Funds in February, Morningstar Canada Data Show

    




 TORONTO, March 2, 2012 /CNW/ - After a strong start to the new year in  January, investment funds in Canada had another solid showing in  February. All but one of the 24 Morningstar Canada Fund Indices that  track equity categories had positive results for the month, including  increases of more than 2% for 18 of them, and all 11 balanced fund  indices were also in the black, according to preliminary performance  data released today by Morningstar Canada. 

 Foreign equity markets generally outperformed their Canadian counterpart  last month, and as a result foreign equity funds dominated the  rankings. The best performer among all Morningstar Canada Fund Indices  was the one that measures the European Equity category, which rose by  5%. This reflected the impressive returns posted by the major European  benchmarks, notably Germany's DAX Index, France's CAC40 and the United  Kingdom's FTSE 100, which gained 6.1%, 4.7%, and 3.3%, respectively.  Other top-performing foreign fund indices included Japanese Equity  (4.6%), Global Equity (4.1%), Asia Pacific Equity (4%), and  International Equity (4%). 

 "In Europe, investors were relieved as Greece received its second  tranche of funding," said Morningstar Fund Analyst Salman Ahmed. "And  in Japan, a depreciating yen increased investor confidence in the  ability of manufacturing firms to competitively price their goods. Even  with the yen's nearly 8% depreciation against the Canadian dollar,  Japanese equities were among the best performers globally for Canadian  investors." 

 Among domestic equity funds, the Morningstar Canadian Equity Fund Index  rose by 1.7% in February, matching the return of the S&P/TSX Composite  Index. Funds in the Canadian Focused Equity category, which can invest  up to half of their portfolios in foreign stocks, did better with an  average gain of 2.4%. Funds that invest in smaller Canadian companies  outperformed large-cap funds, with the Canadian Focused Small/Mid Cap  Equity and Canadian Small/Mid Cap Equity fund indices posting increases  of 4.1% and 3.4%, respectively. 

 The financial services sector was the main contributor to domestic  equity portfolios' positive returns, with the S&P/TSX Capped Financials  Index rising 3.6%. Financials represent about 29% of the typical fund  in the Canadian Equity category. The second largest sector, energy,  also did well with a 2.3% return. "Increasing tensions between Iran and  Israel pushed up the price of oil during the month. Crude oil was up  more than 9% in U.S.-dollar terms. This helped keep the energy sector  in the black," Ahmed said. 

 The worst performer among all Morningstar Canada Fund Indices, and the  only equity fund index to finish the month in the red, was Precious  Metals Equity, which decreased by 1.9%. "The precious metals category  took a beating in February largely due to the fall in gold and silver  prices on the last day of the month. Investors interpreted Ben  Bernanke's comments to the U.S. Congress to mean that the Federal  Reserve would not partake in another round of quantitative easing. This  reduced inflation expectations and the prices of precious metals that  serve as inflation hedges," Ahmed 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 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 375,000 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 and has  more than US$180 billion in assets under advisement and management as  of Dec. 31, 2011. The company has operations in 27 countries. 

Morningstar Research Inc.


CONTACT:  Salman Ahmed, Fund Analyst, Morningstar Canada, [phone];Christian Charest, Editor, Morningstar Canada, [phone] 


    

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