Equity funds in Canada displayed mostly positive performance in the first quarter of 2014, with the bulk of the gains coming in February while January and March results were mostly flat.
All but one of the 21 Morningstar Canada fund indices that measure the aggregate returns of equity funds were up during the quarter, with 13 of the indices increasing by 4% or more.
Fixed-income funds were also in positive territory for the quarter, with most of their gains coming in January, according to preliminary performance data released Wednesday by Morningstar Canada.
Though it was the worst performer in March with a 7.9% decrease, the fund index that tracks funds in the precious metals equity category ended the first quarter at the top of the table with an increase of 19.3%, owing to double-digit increases in January and February.
“As the U.S. economy gained traction and geopolitical tension subsided, the price of precious metals such as gold and silver dropped in March after a run-up in the first two months of the year,” said Joanne Xiao, Morningstar fund analyst.
Funds in the newly created energy equity category, which were previously included in the natural resources equity category, were the best performers in March with an average gain of 4.4% and were third-best for the quarter with a 9.7% increase. The natural resources equity rund index, whose constituent funds combine energy and materials (including precious metals) stocks, was the second-best performer for the quarter with an 11.5% increase.
Among sector-diversified fund indices, the best performers for the quarter were those that track three small- and mid-cap categories: Canadian focused small/mid cap equity, global small/mid cap equity, and Canadian small/mid cap equity, which increased by 6.7%, 5.9%, and 5.8%, respectively.
Helped by its large holdings in natural resources, the Canadian equity fund index had three positive months and ended the quarter with an increase of 5.3%, ahead of European equity (5.2%), U.S. equity (4.1%), global equity (3.9%), and international equity (2.8%).
The only fund index in negative territory — and the worst performer for the quarter — was Greater China equity with a 3.9% decrease. The index was also the second-worst performer for the month of March with a 4% decrease. Second from the bottom of the performance table for the quarter was the Asia Pacific ex-Japan equity fund index with a 0.0% return. The Asia Pacific equity and emerging markets equity fund indices did better, each increasing by 2.8%.
Morningstar Canada’s preliminary fund performance figures are based on change in funds’ net asset values per share during the month, and do not necessarily include end-of-month income distributions. Final performance figures will be published next week.