Precious metals funds were among the few to successfully navigate volatile equity markets in August, according to preliminary performance data released on Wednesday by Toronto-based Morningstar Research Inc.
Only four of Morningstar’s 42 fund indices increased during the month, while 26 of the losing indices decreased by 3% or more.
Funds that focus on precious metals equities were last month’s top performers. “The precious metals equity fund index increased by 3.8% after posting a 16.2% decrease in July, which was the worst result among all fund indices that month,” Morningstar says in a statement.
The only other indices remaining in positive territory in August were the three indices that track the risk-free money market categories, all of which posted minimal increases.
Funds in the Greater China equity category were the worst performers of the month. The index that tracks the category dropped 10.8%, reflecting double-digit losses on both the Hong Kong and Shanghai stock exchanges, Morningstar says.
Three categories with significant exposure to Chinese equities also performed poorly in August. The Asia Pacific Equity, Emerging Markets Equity, and Asia Pacific ex-Japan Equity categories decreased by 7.6%, 8.3%, and 8.8%, respectively.
Domestic equity fund categories posted less severe losses during August. The Canadian dividend & income equity and the Canadian small/mid cap equity categories were the strongest performers, each posting a 3.6% decrease, followed by the Canadian equity category with a 3.9% decrease. The Canadian focused equity and Canadian focused small/mid cap equity fund indices, whose constituent funds have larger allocations to foreign stocks, finished lower in the rankings with decreases of 4.2% and 4.6%, respectively.
Currency movements had less of an effect on fund performance in August than in recent months, Morningstar notes. The Canadian dollar depreciated by 1.5% against its U.S. counterpart, alleviating the losses for funds in the U.S. Equity category, which collectively decreased by 5.4% while the S&P 500 Index lost 6% when measured in U.S. dollars. Meanwhile, the loonie’s 2.8% decline against the euro helped the European equity fund Index limit its decline to 4.7%, as stock markets in Germany and France both dropped by more than 8%.
All seven fund indices that track fixed-income categories were in the red in August. Results ranged from a 0.3% decrease for the Canadian short term fixed income fund index to a 4.2% decrease for the preferred share fixed income fund index.
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.