Twenty of 35 mutual fund categories produced negative median returns during 2001, including virtually all of the equity groups, according to performance data released today by Morningstar Canada.

“Some may still be dubious about whether or not the bull has truly come back, but there’s no doubting the nature of 2001 overall,” said Mark Warywoda, senior analyst with Morningstar Canada. However, a strong fourth quarter, capped by a solid December, softened the bear’s blow on the rest of the year.

The biggest losers were the Science and Technology and Japanese Equity categories, which suffered median returns of -36% and -26%, respectively. Among the broad-based categories, International Equity fared little better, with a 19% median loss.

The best places for fund investors in 2001 were the Precious Metals and Canadian Income Trust categories, with median returns of 28% and 14%, respectively. Money market funds proved to be safe havens during the year. Bond funds thrived as interest rates fell, and as investment capital fled from stocks to bonds, and dividend funds held their own.

December’s results, in which the median fund return was 2%, suggest that a new bull market likely started in late September, Morningstar says.

In December, seven out of every eight funds appreciated, and only a handful of funds lost more than 5%. Equities did well on a global basis, with the exception of Japan. Canadian stocks did at least as well as those in most markets. Small-cap stocks were better than mid- and large-cap stocks (both here and in the U.S.). Bonds lost ground for the second successive month.

The worst performing funds during the month, quarter and year, respectively, were AGF Managed Futures Value, Excalibur Harvest Canadian and Cambridge Resource.

December’s biggest winner was Dynamic QSSP, with a gain of nearly 15% in the fourth quarter. A 68% return made AIC Global Developing Technologies the top fund during the fourth quarter. The best-performing fund in 2001 was Sprott Hedge Fund L.P., up 64%.

Mackenzie Financial Corp. continues to have the most five star funds, with a total of 13 five-star funds. Runner-up is AIM Funds Management Inc., with nine, followed by Franklin Templeton Investments Corp., with seven.