Morningstar Research Inc. has released a summary of institutional pooled fund performance in Canada for the first quarter of 2009.

Despite strong returns in March, only 28% of institutional pooled funds in the Morningstar Canada database managed to post positive returns for the first quarter, Morningstar Research Inc. said Wednesday.

More than 98% of Canadian pooled funds were up in March. Notably, more than half of the equity funds tracked by Morningstar gained 7% or more. But these results weren’t enough to overcome the losses suffered by most funds in the quarter’s first two months. As a result, 87% of equity funds and 89% of balanced funds posted losses for the quarter. However, the damage was much less severe compared to the previous quarter.

Domestic equity funds generally fared much better than their foreign counterparts. The Canadian equity category, which contains 138 pooled funds, had returns ranging from a 5.3% gain to a 10.3% loss, with a median loss of 2%. The median return among the Canadian focused equity category’s 39 funds was a 3.5% loss. Meanwhile, the Global equity, U.S. equity, and European equity categories had median losses of 8.1%, 8.4%, and 10%, respectively, for the quarter. Among the larger fund groups, the worst-performing category was International equity, whose 83 pooled funds lost between 0.1% and 19.3%, with a median loss of 11.2%.

Overall, 13 of the 41 pooled fund categories had positive median returns in the first quarter of 2009, with the best performances coming from two sector-specific equity categories. The five funds that make up the Natural resources equity category had a median gain of 8.8%, with individual returns ranging from a 4.2% loss for Fidelity Global Natural Resources to a 30.5% gain for Goodman Natural Resource Equity, which was also the best performer among all pooled funds in Canada for the quarter. Meanwhile, the one fund in the Precious metals equity category — Goodman Precious Metals Equity — gained 23.5%, ranking second overall. Three other pooled funds posted double-digit gains for the quarter: Acuity Pooled 130/30 (17.6%), London Life Canadian Resources – AGF (11%), and HSBC U.S. High Yield Bond Pooled (10.2%).

Of the 294 pooled funds that had positive results in the first quarter, 133 were fixed-income funds, representing nearly 89% of funds that target that asset class. In the core Canadian fixed income category, all but one of the 84 constituent funds posted gains. The best performer in that category was Natcan Corporate Bond with a 4.2% gain, while the only negative-performing fund was Leith Wheeler Fixed Income, down 0.2%. The worst returns among bond funds were in the Global fixed income category, where 11 of 30 funds had losses. The bottom performer in that category was TD Emerald Global Government Bond Index, down 4% for the quarter.

Morningstar Canada releases performance figures for pooled funds each month through its Principia for Pooled Funds software.

IE