Value managers lead Morningstar Canada’s list of five-star Canadian Equity funds, as of April 30.

The fund rating firm says that over 75% of the 17 five-star funds in this asset category exhibited typical value characteristics. No true “growth” fund made the list. Although three funds within this group have growth components in their holdings, according to Morningstar they are better considered “blend” funds given their current holdings.

Value funds commonly invest in stocks with below-average Price-to-Earnings and/or Price-to-Book ratios. It is often thought that these low ratios may indicate that the stocks are potentially undervalued. According to Stephen Burnie, Morningstar’s director of research and analytics, “the value style of investing is once again in resurgence. However, investors shouldn’t rotate their investments based on the flavour of the day. It is worthwhile taking a longer term look at investing and the benefits of style diversification.”

C.I. Funds had the most five-star funds on the Morningstar list, with 10. It is followed by Great-West Life, and a three-way tie for third between Scudder Maxxum, Mackenzie and CIBC.

Morningstar ratings are based on long-term performance records and all funds with a three-year track record are subject to the ratings. These ratings are a quantitative, unbiased assessment of a mutual fund’s historical risk-adjusted performance relative to its peers. In Canada, the peer groups are determined by the fund categories as defined by the Investment Funds Standards Committee.