Canadian mutual funds delivered a mixed peformance in August. According to preliminary data from Morningstar Canada, 16 of 32 fund indices gained ground or broke even during the month. This was an improvement from July, when 22 fund indices were in the red.

The Precious Metals Fund Index was the top one-month performer, gaining 5.9% in a sharp turnaround from July’s 5% loss. That’s not unusual for this volatile sector, which during the past year has experienced one-month returns ranging from 15.3% in October 2003 to -17.3% in April 2004. The index has lost 19.7% so far in 2004.

The second best performing fund index in August was Latin American Equity, up 3.1%, followed by Emerging Markets Equity, up 2.3%.

The Latin group is the third best year-to-date performer, up 7.15%, after Canadian Income Trusts and Japanese Equity, up 7.5% and 7.19% respectively since the beginning of this year.

Precious Metals funds were boosted by a rise in the price of gold as the U.S. dollar fell, said David O’Leary, Morningstar Canada senior analyst, in a release. “Disappointing economic data out of the U.S. was responsible for the greenback’s fall. Initial jobless claims rose for the first time in four weeks and second-quarter U.S. GDP was revised downward,” O’Leary said.

At the negative end of the performance spectrum, Science and Technology lost 4.4% during August, followed by U.S. Small and Mid Cap Equity, down 2.7%. Natural Resources, July’s top performing index at 1.9%, was among those at the bottom in August, losing 1.1%, as oil prices fell toward the end of the month.

Technology funds were dragged down by an 8% drop in the Nasdaq composite index, O’Leary said. “The Nasdaq was weighed down by Intel Corp.’s stock, which suffered from several analyst downgrades,” he said. “Earlier in the month, another Nasdaq stalwart, Cisco Systems Inc., fell sharply as concerns about a rise in inventory and comments from cautious customers hurt the stock in after-hours trading.”

The more broadly based fund indices focused on North American equity suffered modest losses in August. Canadian Equity slipped 1.2%, Canadian Equity Pure (which represents funds that are at least 95% invested in the Canadian market) fell 0.9% and U.S. Equity dropped 0.8%.

Final performance figures will be published at mid-month.