Led by Precious Metals and Science and Technology, 18 of the 32 Morningstar Canada Fund Indices posted gains in May, according to preliminary data from Morningstar Canada released today. That is an improvement over April, when only nine indices produced positive returns.

Precious Metals led all indices in May, with a return of 5.1%. It finished well ahead of the runner-up, Science and Technology, which gained 3.3%.

The worst laggard was the Japanese Equity index, down 3.7%. Nearly as weak were the Asia Ex-Japan Equity index, losing 3.5%, and the Emerging Markets Equity index, which fell 3.2%.

May started out very poorly for mutual funds, with many of the 32 Morningstar indices losing ground early in the month, said Morningstar Canada analyst Mark Chow in a news release.

“It was a volatile month, with markets reacting to conflicting signals on U.S. inflation, high oil prices and terrorist attacks in the Middle East,” Chow said. “On the plus side, we’re seeing some very positive earnings reports among science and technology stocks, and energy and mining have been strong sectors,” he added.

In the North American markets, Canada outperformed the U.S., with Morningstar’s Canadian Equity index posting a 1.3% return. The U.S. Equity index finished a full percentage point behind, up 0.3%. The Canadian Equity (Pure) index, third overall in May, fared even better with a 2% return.

Part of the performance gap between the Canadian and U.S. equity markets was due to a 0.5% appreciation of the Canadian dollar versus its U.S. counterpart. “The weakening U.S. dollar also provided a boost to the Precious Metals index, since bullion prices and the U.S. dollar tend to move in opposite directions. In addition, gold stocks benefited from recent takeover bids in Canada,” Chow said.

The Moringstar preliminary numbers are based on the change in funds’ net asset values per share during the month, and do not necessarily include end-of-month income distributions such as dividends, interest or capital gains.

Final performance figures will be published at mid-month.