Funds post strong gains in February

By Steven Lamb | March 2, 2005 | Last updated on March 2, 2005
2 min read

(March 2, 2005) Canadian mutual fund investors enjoyed a “formidable February” as the majority of investment fund categories turned in positive results, according to preliminary data from Morningstar Canada.

Higher energy prices were again a major contributing factor to rising fund values, as natural resources topped Morningstar’s list of 32 fund indices, posting a single-month gain of 11.9%. So far this year, the resource index has gained 16%.

“Oil prices have remained lofty, once again breaking through the US$50 per barrel barrier, due to cold weather in the Western Hemisphere, potentially forestalling the Organization of Petroleum Exporting Countries’ plans to cut production,” said Morningstar Canada analyst Brian O’Neill. “Continued global demand for materials has also sparked this category’s performance.”

Following the broad-based resource sector, the Latin American Equity Fund Index gained 11.8%, Emerging Markets Equity gained 7.7% and Precious Metals picked up 7.6% on the month.

Canadian equity fund categories performed fairly well, despite currency issues. The Canadian Equity (Pure) index gained 4.9%, while the Canadian Equity index rose 4.7%. Small cap investors did even better, as the Canadian Small Cap Equity Fund Index gained 6.7%.

“The S&P/TSX Composite Index has posted positive returns for seven straight weeks,” O’Neill points out. “The energy, materials, and financials sectors — which together comprise almost 70% of the index — were all up for the month.”

Among foreign-based investment funds, the Asia ex-Japan index led the pack, gaining 4.7%, roughly matching the performance of the region’s dominant stock index, the Hang Seng, which gained about 4.5% on the month. Japanese Equity returned a meagre 0.8%, despite a 3% gain on the benchmark Nikkei.

European Equity posted a monthly gain of 4.2%. U.S. Equity rose 1%, with more growth found among smaller companies. The U.S. Small & Mid Cap Equity index gained 2.2%.

Poor performance on the American markets also held back the Global index, which gained only 2.3%, while International Equity funds returned 3.6%.

Only three of Morningstar’s fund indices failed to join the February rally, but losses were minor, as the Healthcare index dropped 0.5%, followed by Canadian Bond and Foreign Bond fund indices, which gave up 0.2% and 0.4%, respectively.

Filed by Steven Lamb,,


Steven Lamb