Most fund categories see gains in February: Morningstar

Most stock market indexes outside of Canada were positive in February, while the Canadian dollar depreciated against many of the world’s currencies. This combination resulted in strong performance for all foreign equity fund categories in Canada for the month.

Funds in the Greater China equity and U.S. equity categories were the top performers in February; the indices that track these two categories both increased by 5.1% for the month.

The S&P 500 index in the United States had a total return of 4.0%, and the U.S. dollar gained 1.7% on its Canadian counterpart. Stock markets in Shanghai, Hong Kong, and Taiwan were up 2.6%, 1.6%, and 3.2%, respectively, with currency effects also providing a boost in all three cases.

Among the major sector-diversified foreign equity categories, the index that tracks emerging markets equity funds was a top performer with a 4.6% increase, as was the Asia Pacific equity fund index with a 3.7% increase.

The European equity, international equity, and global equity fund indices increased by 2.8%, 2.9%, and 4.0%, respectively.

The only fund indices to lose ground in February were the ones that track the precious metals equity, energy equity, and natural resources equity categories, which were down 2.1%, 2.3%, and 2.4%, respectively. The energy and materials sectors, which together comprise a third of the Canadian stock market, were the worst performers on the Toronto Stock Exchange with declines of 2.4% and 3.7%, respectively.

Though all other sectors in Canada were positive in February, the poor showing by natural resources stocks dragged down the performance of diversified Canadian equity funds, resulting in increases of just 0.3% for the Canadian equity fund index and 0.1% for the Canadian small/mid cap equity fund index. The fund indices that track the Canadian focused equity and Canadian focused small/mid cap equity categories, whose constituent funds can hold up to half their assets in non-Canadian stocks, performed better with increases of 1.6% and 1.9%, respectively.

All fixed-income fund categories showed gains for the month, with increases ranging from 0.3% for the Canadian short term fixed income fund index to 1.7% for the Canadian long term fixed income fund index.

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.

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