For the third consecutive month, a majority of equity mutual funds in Canada posted positive results in November, with funds that focus on China, Japan, and the United States showing particularly strong numbers.
Eighteen of the 22 Morningstar Canada fund indices that track equity categories posted increases for the month, including 14 categories that were up by more than 2%, according to preliminary performance numbers released Tuesday by Toronto-based Morningstar Research Inc.
The best performer among all the fund indices was the one that tracks the aggregate returns of funds in the Greater China equity category, which increased by 6.5% in November.
The Japanese equity fund index was also among the top performers in November with an increase of 4.3%, its best monthly performance since April.
Funds that invest in U.S. equities did very well last month. The U.S. small/mid cap equity and U.S. equity fund indices increased by 4.5% and 4.1%, respectively, as economic signals suggested that consumers may be poised to provide a boost to economic growth.
While stock markets in China and the United States enjoyed strong gains, Canadian fund investors in these categories also benefited from favourable currency effects, as the Canadian dollar declined by 1.6% last month against the U.S. dollar, the Hong Kong dollar, and the Chinese yuan. The loonie also dropped against the euro by 1.7% and against the UK pound by 3.4%, which helped the European equity fund index post a 2.7% increase for the month despite lacklustre market returns in France and the UK.
Domestic equity funds had positive but middling results last month. However, fund managers were able to add value over their market benchmarks: the Canadian equity, Canadian dividend & income equity, and Canadian focused equity indices increased by 0.9%, 1.1%, and 1.9%, respectively, beating the S&P/TSX Composite Index’s rise of 0.5%. Meanwhile, the Canadian focused small/mid cap equity and Canadian small/mid cap equity indices were up 2.4% and 3%, respectively, both surpassing the BMO Small Cap Blended Index’s 1.9% increase.
Once again, the worst-performing equity fund index in November was precious metals equity with a decrease of 10.9%.
The other three equity fund indices in negative territory were emerging markets equity with a 0.6% decrease, real estate equity, down 1.8%, and natural resources equity, down 2.4%.
Final performance figures will be published on next week.