Equity funds have strong Q2

By Staff | July 3, 2014 | Last updated on July 3, 2014
2 min read

Performance for equity funds in Canada in the second quarter of 2014 was very similar to that of the first quarter, with most categories showing positive results and natural resources funds leading the way, according to Morningstar Canada.

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Eighteen of the 21 Morningstar Canada Fund Indices that measure the aggregate returns of equity funds were up during the quarter, 11 of which increased by 3% or more.

The Morningstar Canada Fund Index that tracks funds in the Energy Equity category was the best performer in the second quarter with an increase of 13.7%, and it was third-best performing index for the month of June with a 6.3% increase. The Morningstar Natural Resources Equity Fund Index, whose constituent funds combine energy and basic materials stocks, including precious metals, was the third-best performer for the quarter with a 10.6% increase, the majority of which occurred in June.

Precious Metals Equity was the second-best performing fund category in Canada with a 12.1% increase in the second quarter of 2014, thanks to its chart-topping 18.9% increase in June.

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The five domestic equity fund indices were all among the top 10 performers for the quarter, having posted positive results for three consecutive months in most cases. The purely domestic Canadian Small/Mid Cap Equity and Canadian Equity categories were up 6.2% and 5.8%, respectively, while the Canadian Focused Small/Mid Cap Equity and Canadian Focused Equity categories, which can allocate up to 49% of their holdings in foreign stocks, increased by 4.7% and 3.8%, respectively. The Morningstar Canadian Dividend & Income Equity Fund Index was up 5% for the quarter.

Foreign equity funds were mostly positive but their returns on average were less than those of funds that focus on resources-rich Canada. Notably, the Morningstar Emerging Markets Equity Fund Index increased 3.2% for the quarter;Asia Pacific ex-Japan Equity was up 2.3%; and U.S. Equity increased by 1.5%. These returns were hampered by currency effects, as the Canadian dollar appreciated against most major currencies during this period.

The worst-performing fund indices — and the only ones in the red for the quarter — were Greater China Equity and U.S. Small/Mid Cap Equity, with decreases of 0.3% each, and European Equity, down 1.8%. European Equity was also the worst performer for the month of June with a 1.5% decrease.

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Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.