Mutual fund investors had a tough month of March, as funds invested in every asset sector except real estate and money markets suffered losses, according to preliminary performance data from Morningstar Canada.

All but three of the 32 Morningstar Canada fund indices posted negative one-month returns. It was a sharp turnaround from February, when all but three of the 32 fund indices were in positive territory.

The month’s worst performing index was Latin American Equity, which plunged 10.6%, losing almost all of its February gain. Emerging Markets Equity plunged 8%, while Precious Metals tumbled 7.2%.

“Funds in the Latin American Equity category have been on a tear over the last couple of years, but their volatility is very real because their constituents are vulnerable to periodic sell-offs,” said Morningstar Canada analyst Brian O’Neill. “Many of the region’s larger stocks, such as Mexico’s America Movil and Brazil’s Companhia Vale do Rio Doce, had double-digit decreases in March in reaction to increased speculation of accelerated rate hikes in the United States.”

Asian funds didn’t fare much better, particularly those invested outside Japan. The Asia-ex-Japan Equity index fell 6.1%, while Japanese Equity lost 4.1%. European Equity also had a bad month, dropping 4.3%

The three Morningstar Canada Fund Indices that made it into the black in March barely broke even. The Real Estate index eked out a 0.09% gain, followed by Canadian Money Market at 0.04% and U.S. Money Market with 0.01%. The best performing sectors among the host of losers were those that focused on Canadian large-cap stocks and domestic fixed-income securities.

The Canadian Equity (Pure) fund index ended the month with a 0.04% loss, with Canadian Dividend on its heels, down 0.09%. The Canadian Equity Fund Index — the funds of which can invest up to 30% of their portfolios in U.S. and foreign markets — dropped 1.3%. This was explained by underperforming foreign markets. The U.S. Equity index fell 3.2%, while Global Equity and International Equity each lost 3.6%.

Domestic fixed-income funds fared relatively well, too, as the Canadian Bond, Canadian Short-term Bond and Canadian Mortgage fund indices each had negative one-month returns of less than 1%. Cash and bond performance also limited losses for Canadian Balanced and Canadian Asset Allocation funds.

Natural Resources fell off its performance perch, losing 3.5% during March following a February-leading performance of 12.1%. It was the first quarter’s top performer, however, at 12.5%. Canadian Equity (Pure) and Canadian Small Cap Equity were the quarter’s next best performers, each up 4.2%, followed by Canadian Equity at 3.5%. The worst performing fund index during the three-month period was Science & Technology, which lost 6%. Faring only slightly better were Precious Metals, down 4.9%, and Healthcare, off 4.8%.

“Looking at the first quarter in its entirety, commodities have continued to be the dominant story, particularly oil stocks,” says O’Neill. “Although the Natural Resources fund index gave up 3.5% last month, these funds are still miles ahead of the pack year-to-date”

Final performance figures will be published on at mid-month.