Equity funds beaten down in June

June was a difficult month for Canadian investment funds, despite a late rally that repaired some of the damage done in the first two weeks.

Only one of 24 Morningstar Canada equity fund indices managed to post a positive return, as the Japan Equity Fund Index gained 1.2%.

Outside of the equity mandates, only one other fund group—Canadian Short Term Fixed Income—offered a positive return, posting a gain of just 0.2%.

The worst performing sector was the Precious Metals Equity index, which served up a loss of 6.2%. Shares in mining companies fell the U.S. dollar regained its footing, sending the price of safe haven metals lower.

Things weren’t much better in the energy-heavy Natural Resources Equity Fund Index, which fell 5.9% following news the International Energy Agency would top up the global oil supply.

“On June 23 the IEA announced that its member countries, including the United States, would tap their oil reserves to the tune of 60 million barrels to make up for lost production in Libya and keep oil prices down,” explained Morningstar fund analyst Adam Fisch. “That news affected Canadian oil and gas producers like Canadian Natural Resources, who rely on oil exports to the United States.”

With the resource sectors in decline, the overall domestic equity picture was pretty dismal as well. The Morningstar Canadian Equity Fund Index lost 3% for the month, while the Canadian Small/Mid Cap Equity Fund Index lost 4%.

Foreign equity funds were also in retreat, as the International Equity group fell 1.9%, U.S. Equity and Global Equity each dropped 2.2%. The long-running drama of the Greek debt crisis helped carve 2.7% off of the European Equity group, while the Greater China Equity dropped 4.5%

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.