Equity-based investment funds enjoyed strong returns in April, according to preliminary performance data released today by Morningstar Canada.

All but one of the fund indices that track the performance of equity fund categories showed positive returns for the month, with 10 of the indices gaining 4% or more.

This positive performance comes on the heels of a very volatile first quarter that saw practically all of those same indices finish in the red.

The best performer in April was the emerging markets equity fund index with a 6% gain. Markets in Brazil and Hong Kong were the main contributors, with Sao Paulo’s BOVESPA Index and Hong Kong’s Hang Seng returning 11.3% and 12.7%, respectively, when measured in local currencies. “Brazil is being seen as the perfect way to play the commodity boom,” says Bhavna Hinduja, fund analyst for Morningstar Canada.

The second best return in April belonged to the Canadian equity fund index, which gained 5.4%. This was the best monthly return for that fund category since December 2005.

“Canadian equity markets were boosted by the energy sector as oil prices reached new records due to worries over supply disruptions from major producers and OPEC’s announcement that it wasn’t considering raising output to curb prices,” Hinduja said.

The Asia Pacific ex-Japan equity fund index ranked third for the month with a 5.2% return, while science & technology equity and Japanese equity were tied for fourth with 5% each. Other equity fund indices with positive returns include Canadian focused equity (4.1%), international equity (3.9%), global equity (3.4%) and U.S. equity (2.8%). However, currency movements had a detrimental effect on fund returns in all these categories.

The worst performing fund index in April — and the only equity index to lose ground for the month — was precious metals equity with a 10.7% loss, resulting from falling gold prices during the month. “The spot price of gold fell by roughly 5% in April due to the appreciation in the U.S. dollar,” Hinduja says.
Final performance

Final performance figures will be published on next week.