Energy stocks rebounded in September: Morningstar

Twenty-nine of the 44 Morningstar Canada fund indexes increased during Q3 2017, with 11 indexes increasing by 2% or more. Also, five of the 15 fund indexes with negative results were down by 1% or more.

Here are additional findings from Morningstar Research Inc.:

The best-performing fund index for the third quarter was the one that tracks the Greater China Equity category, which increased 8.1%. This fund category has dominated the Canadian marketplace since the beginning of the year, including chart-topping performances in July and August, but its September result was a middling 0.5%.

Three sector-specific fund categories were among the top performers. The Morningstar Energy Equity Fund Index had the second-best result for the quarter with a 6.8% increase, which included a 10.3% increase in September that was the best among all categories for the month. The Natural Resources Equity and Financial Services Equity fund indexes followed with increases of 4.1% and 3.9%, respectively, for the quarter and were ranked third and second for the month of September, up 3.1% and 4.9%, respectively.

Aided by strong results in the energy and financial services sectors, funds that invest in Canadian stocks had a solid month in September, and ended the quarter among the best performers. The Morningstar Canadian Equity Fund Index, which has struggled so far in 2017, increased 3.1% for the month and 3.0% for the quarter, while the Canadian Dividend & Income Equity and Canadian Focused Equity fund indexes were up 2.6% and 2.5% for the month, and 2.3% and 1.7% for the quarter, respectively.

The Morningstar U.S. Equity Fund Index increased 2.1% for the month, matching the S&P 500 Index’s total return. For the quarter, the fund index underperformed with a 1.1% increase, compared to a 4.5% total return for the benchmark, owing to a significant appreciation of the Canadian dollar against its U.S. counterpart in July. Currency effects were minimal in August and September.

Only four fund indexes representing equity categories were in the red for the quarter, two of which are comprised of sector-specific funds. The Morningstar Global Infrastructure Equity Fund Index was down 0.5% for the three-month period, while Real Estate Equity was down 0.9%. The other two losing fund indexes were U.S. Small/Mid Cap Equity and Global Small/Mid Cap Equity, which decreased 0.3% and 1.1%, respectively.

The biggest losers in the third quarter were fixed-income fund categories, with four of eight fund indexes ending the period in negative territory. The fund indexes that track the Canadian Fixed Income, Canadian Inflation-Protected Fixed Income, and Canadian Long Term Fixed Income categories decreased 1.8%, 3.2%, and 4.3%, respectively. The best-performing fund indices within the fixed-income asset class were Preferred Share Fixed Income, up 2.0%, and High Yield Fixed Income, up 0.8%.

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