Canadian fund returns golden in February

By John Powell | March 2, 2010 | Last updated on March 2, 2010
2 min read

They flopped in January but flew in February.

Canadian investment funds focused on domestic equities and sector-specific funds which hold predominantly Canadian content posted strong returns in February, according to Morningstar Canada.

Thirty-four of the 43 Morningstar Canada Fund Indices posted gains led by the Morningstar Precious Metals Equity Fund Index with its 6.8% return. Precious metal giants Barrick Gold and Goldcorp rose by 6.8% and 9.9%, respectively, as investors continued to look at those stocks as safe havens.

All six Canada-focused equity fund indices were among the top 10 performers. The Morningstar Canadian Equity Fund index ranked second overall with a 4.6% return.

“The positive performance of broader Canadian equities over the month was a return to form buoyed by renewed momentum of the Canadian dollar, rising commodity prices, and the robust performance of financials,” said Neal Brandon, fund analyst for Morningstar Canada.

Funds targeting the financial services and commodities sectors also did well. The Morningstar Natural Resources Equity Fund Index gained 3.4%, which was good enough for seventh place, while the Morningstar Financial Services Equity Fund Index came in third with a 4.2% return.

As expected, foreign equity funds had mixed results. Of the nine fund indices that were in the red in February, six track foreign equity categories. The worst performers among these were International Equity (-1.5%), Japanese Equity (-2.1%) and European Equity (-3.2%).

“Concern over European sovereign-debt issues came to the forefront in February as investors speculated on the implications of Greece’s hefty fiscal deficit and the resolve of the wider European region to offer support,” Brandon said. “The European common currency also suffered under this cloud of uncertainty, contributing to the losses experienced by Canadian unitholders of funds that hold euro-denominated stocks.”


John Powell