Three consecutive months of mostly positive returns resulted in nearly 98% of the 1,038 pooled funds in the Morningstar Canada database posting gains for the second quarter, Morningstar Research Inc. said Monday.

All 41 of the Morningstar Canada pooled fund indices had positive returns for the quarter. Twenty-five of the indices returned more than 10% over the three-month period, with eight of them gaining 20% or more.

The best-performing fund index was the one that tracks the Canadian focused small/mid cap equity category, which gained 23.6%. Most of that fund index’s gains came in April and May, when it returned 11.1% and 10.2%, respectively, though it did post a modest 0.9% gain in June.

Other domestic equity categories also posted strong quarterly returns that ranked near the top of the table. The Canadian small/mid cap equity pooled fund index was up 21.4%, ranking fifth overall. The other four domestic equity fund indices — Canadian equity (up 20%), Canadian dividend & income equity (19.6%), Canadian focused equity (18.5%), and Canadian income trust equity (17.7%) — ranked from eighth to 11th place. All of these indices also obtained most of their gains in the first two months of the quarter while posting more muted returns in June.

Among the 254 individual funds belonging to these six domestic equity categories, all but four posted double-digit returns in the second quarter, including 107 that gained more than 20%. The best performer was Bissett Small Cap, up 37.7%, followed by a clone of the same fund sponsored by Desjardins Financial Security, which was up 37.6%, and Manulife Canadian Small Cap Equity, which gained 29.7%. Only one domestic equity fund had a negative return: Montrusco Bolton Quantitative Canadian Equity was down 2.7% for the quarter.

The other pooled fund categories whose index returns ranked in the top five were real estate equity (23.2%), emerging markets equity (22.8%), and Asia Pacific equity (22.4%). These categories contain just four, five, and two pooled funds, respectively.

Among the three largest foreign equity categories, the international equity pooled fund index gained 15.5% for the quarter, ranking 14th overall, while global equity returned 11.6% (ranking 20th) and U.S. Equity was up 7.2% (ranking 32nd).

The best-performing individual foreign fund was Goodman Far East Equity Value, up 36.7%, while at the bottom the only other equity fund in the red was Montrusco Bolton Quantitative EAFE Equity, down 2.9%.

IE