Weak but mostly positive performance for Canadian funds in August: Morningstar

Foreign equity funds outpaced the results of domestic equity funds in November, according to preliminary published on Monday from Toronto-based Morningstar Research Inc.

Thirty-nine of the 44 Morningstar Canada fund indices increased during the month, with nearly all of them increasing between 0.0% and 2.0%, while the five losing indices decreased by 0.1% to 0.7%.

The best-performing fund index for the month was the one that tracks the U.S. equity category, which increased 2.9%, underperforming the S&P 500 index which had a total return of 3.1% for the month.

In second place, the U.S. small/mid cap equity fund index increased 2.5% in November but also underperformed this fund category’s market benchmark, the Russell 2000 index, which had a total return of 2.9%. Currency effects between the Canadian and U.S. dollars were negligible over the period, Morningstar says in its announcement.

Among sector-diversified fund categories, the ones that have a large dose of U.S. stocks had an edge in November. Finishing in the top 10 was the fund index that tracks the global small/mid cap equity category with a 2.0% increase, as well as the North American equity and global equity fund indices, both up 1.7%. Funds in all three of these categories typically hold approximately half their assets in U.S. equities.

Three sector-equity fund indices were also among the top 10: real estate equity ranked third overall with a 2.3% increase, while financial services equity and global infrastructure equity were both up 1.3% for the month.

Domestic equity funds had weak but mostly positive results in November, reflecting the 0.5% total return of the S&P/TSX composite index. The Canadian equity fund index increased 0.3%, while the Canadian focused small/mid cap equity, Canadian focused equity, and Canadian dividend and income equity fund indices were up 0.9%, 0.7%, and 0.6%, respectively. The only domestic equity fund index to lose ground in November was Canadian small/mid cap equity, down 0.3%.

The worst-performing fund indices were the ones that track the precious metals equity and the energy equity fund categories, decreasing 0.5% and 0.7%, respectively. The other two fund indices in the red for the month were high yield fixed income and European equity, down 0.1% and 0.2%, respectively.

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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