Energy funds rebound: Morningstar data

Morningstar Research has released preliminary performance data for its Canadian fund indices.

The data shows 17 of the 42 fund indices that were measured increased in April, with seven rising by 2% or more. Meanwhile, three of the fund indices that lost ground decreased by more than 2%.

Data highlights

Funds in the Greater China Equity category outperformed: the fund index that tracks this category increased by 9.5% in April, and both the Shanghai and Hong Kong stock markets posted double-digit gains for the month. But, a strengthening Canadian dollar versus major Asian currencies mitigated the positive effect for domestic investors. Still, the Morningstar Asia Pacific Ex-Japan Equity Fund Index was also a top performer saw a 2.9% increase.

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Funds that concentrate on the energy sector had their best monthly return of the past year over the same period, with a 7.4% increase. The Morningstar Natural Resources Equity Fund Index’s monthly results have been negative in eight of the past 12 months, and it was the overall worst performer for the 2014 calendar year. However, rebounding energy stocks and strong gains in the basic materials sector resulted in the fund index posting the third-best result of the month (+6.8%).

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On the downside, funds in the Canadian Equity category posted an aggregate increase of 1.7% in April—they underperformed the S&P/TSX Composite Index’s 2.4% gain for the month. But, among other domestic equity fund categories, both Canadian Small/Mid Cap Equity and Canadian Dividend & Income Equity increased (by 2.6% and 1.5%, respectively).

The worst performing fund indices were the ones tracking the U.S. Equity and U.S. Small/Mid Cap Equity categories. They posted decreases of 3.2% and 5.1%, respectively. Even though stock markets in the U.S. were flat to slightly positive, currency effects negatively impacted the funds, and the U.S. dollar depreciated by 4.4% during the month versus its Canadian counterpart.

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Further, all seven fund indices that track fixed-income categories posted negative results in April. The best performer among the group was the Morningstar High Yield Fixed Income Fund Index, with a 0.1% decrease. The worst performer of the bunch was the Morningstar Canadian Long Term Fixed Income Fund Index, which had a 2.7% decrease.

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