Sector-specific fund indices occupied both the top and bottom rungs of the performance ladder for January, according to preliminary performance data released Thursday by Toronto-based Morningstar Research Inc.
Eighteen of the 44 Morningstar Canada fund indices increased during the month, though only six indices increased by more than 2%.
Asian equity funds were the best performers among sector-diversified equity categories. The Greater China equity fund index increased 3.2% in January, owing to a strong showing by Hong Kong-listed stocks. Nevertheless, the 6.2% increase of Hong Kong’s Hang Seng Index was tempered for Canadian investors by a 3.0% depreciation of the Hong Kong dollar relative to its Canadian counterpart.
The Asia Pacific ex-Japan equity and Asia Pacific equity fund indices were also among the top performers last month with increases of 2.8% and 2.3%, respectively, as was the emerging markets equity fund index, up 2.5%.
The best performer overall for January was the recious metals equity fund index, up 11.8%, while the fund index that tracks the energy equity category was the worst with a 6.9% decline.
In contrast to the top and bottom performers, most fund categories saw little movement in January, with 31 of the fund indices posting movements ranging from a loss of 1.0% to a gain of 1.0%.
All five Canadian stock categories were included in that group, with results ranging from a 0.4% increase for the Canadian equity fund index to a 0.9% decrease for Canadian small/mid cap equity. The S&P/TSX composite index posted a total return of 0.8% for the month, reflecting solid gains in the basic materials and financial services sectors combined with sharp losses in the energy sector.
U.S. stocks outperformed Canadian stocks in January, with the S&P 500 producing a total return of 1.9%. However, these gains were wiped out by currency effects, as the Canadian dollar appreciated 3.0% against the greenback, leading to a 0.7% decrease for the U.S. equity fund index. The U.S. small/mid cap equity fund index was also in the red, down 0.3%.
European markets posted modest losses, which were amplified by adverse currency effects, resulting in a 0.6% decrease for the European equity fund index in January. Representing the two most diversified equity categories, the international equity fund index was up 0.2% for the month, while global equity was down 0.3%.
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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