Equity funds post mixed results: Morningstar

By Staff | November 2, 2012 | Last updated on November 2, 2012
2 min read

Equity funds in Canada showed mixed results in October.

Target Asian and European markets posted positive returns, while U.S. and Japanese equity funds were in the red. Those that focus on Canadian equities offered modest gains, according to preliminary performance numbers released today by Morningstar Canada.

Read: Equity funds struggle but remain positive

The best performer among the 42 Morningstar Canada Fund Indices was the fund that tracks the Greater China Equity category, which followed up its impressive 6.2% increase in September with a 5.4% jump last month.

“A series of recent small stimulus steps taken by the Chinese government, as well as talk of further and bigger stimulus measures in advance of China’s leadership change on Nov. 8, helped fuel this rally,” says Morningstar Fund Analyst Joanne Xiao.

Read: Don’t bet on a China slowdown

In second place, the Morningstar European Equity Fund Index posted its third consecutive monthly increase, rising 2.6%, while the fund indices that track the International Equity, Asia Pacific Equity, and Emerging Markets Equity also increased by 1.9%, 1.6%, and 1.5% for the month.

“Quantitative easing remained the top story in October, and European equities continued to rally on the back of the European Central Bank’s bond-buying program,” Xiao says.

In the U.S., the S&P 500 Index had one of the worst performances among major markets with a 1.9% loss in October, but funds in the U.S. Equity category benefited from the depreciation of the Canadian dollar versus its U.S. counterpart.

Read: How to evaluate corporate equities

The Morningstar U.S. Equity Fund Index decreased by 1.3% for the month, which was the second-worst return of all Morningstar Canada Fund Indices. Other fund indices that slumped included the Japanese Equity index (0.2%) and U.S. Small/Mid Cap Equity index (0.9%).

Also at the bottom were four sector-specific fund indices: Natural Resources Equity (-0.6%), Real Estate Equity (-0.9%), Precious Metals Equity (-0.9%), and Health Care Equity (-2.1%).

Morningstar Canada’s five domestic equity fund indices all had positive results last month, though all ranked in the middle of the pack overall. The Morningstar Canadian Equity Fund Index had the best return with a 1.3% increase, while Canadian Focused Equity, Canadian Dividend & Income Equity, and Canadian Small/Mid Cap Equity posted modest increases of 1.1%, 0.9%, and 0.3%.

Read: Canadian economy bouncing back

“Canadian equities were positive this month thanks to strength in a number of sectors, with the biggest contributions coming from financials and telecommunications. In spite of weakness in commodity prices, the materials sector in Canada was an overall positive contributor for the month,” Xiao said.

Final performance figures will be published on www.morningstar.ca next week.

Advisor.ca staff


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