Foreign Equity Funds Continue to Shine in January, Morningstar Canada Data Show

Foreign Equity Funds Continue to Shine in January, Morningstar Canada Data Show 
TORONTO, Feb. 4, 2013 /CNW/ - Positive momentum from 2012 continued for 
investment funds in Canada into the first month of 2013, with strong gains 
posted in most equity, balanced, and fixed income fund categories in January. 
Thirty-seven of the 42 Morningstar Canada Fund Indices had positive results 
for the month, including increases of more than 3% for 13 of the 24 equity 
fund categories, according to preliminary performance data released today by 
Morningstar Canada. 
Several trends that were observed in the last few months of 2012 continued 
into the new year. The best-performing fund index for the month of January, as 
it was for the whole of 2012, was the one that measures the Health Care Equity 
category with a 7% increase. Meanwhile, at the bottom of the table, the only 
two equity fund indices to lose ground for the month were once again Natural 
Resources Equity and Precious Metals Equity, which decreased by 0.1% and 7%, 
"A combination of factors such as macroeconomic uncertainty, improving stock 
fundamentals, and increasing consumer demand due to an aging population 
contributed to the outperformance of the health care sector, which is 
traditionally seen as defensive," said Morningstar Fund Analyst Joanne Xiao. 
"Gold prices continued to face downward pressure and dropped more than 11% in 
the month of January alone, adding to the 11% decline in 2012." 
Another trend that carried over from last year was the dominance of foreign 
equity funds over their Canadian-focused counterparts. The U.S. stock market 
had an exceptionally good month in January, with the S&P 500 Index gaining 
5.2%; coupled with favourable currency effects, this translated into an 
average gain of 5.6% for funds in the U.S. Equity category, and 5.8% for the 
U.S. Small/Mid Cap Equity category. Major European and Asian markets also had 
a good month, leading to strong increases for the European Equity (4.6%), 
International Equity (4.6%), Global Equity (4.5%), and Japanese Equity (3.9%) 
fund indices. 
Canadian equities continued to post strong gains in January, with the 
financial services sector doing particularly well, but overall market 
performance was once more dragged down by a lethargic resources sector and 
failed to keep up with overseas markets. As a result, Canadian equity funds 
produced returns that were good on an absolute basis but lagged other equity 
categories. The Morningstar Canada Fund Indices that track the Canadian 
Equity, Canadian Dividend & Income Equity, and Canadian Small/Mid Cap Equity 
categories increased by 2.5%, 2.7%, and 2.9%, respectively. The Canadian 
Focused Equity and Canadian Focused Small/Mid Cap Equity categories, which can 
invest up to 50% in foreign stocks, did better with increases of 3.6% and 
3.4%, respectively. 
As was the case in December, the three fixed-income categories that target 
intermediate and long-term bonds were in the red in January. The Morningstar 
Canadian Fixed Income Fund Index decreased by 0.7% for the month, while 
Canadian Long Term Fixed Income and Canadian Inflation-Protected Fixed Income 
decreased by 2.2% and 2.6%, respectively. 
"This was the worst month for Canadian Long Term Fixed Income and Canadian 
Inflation-Protected Fixed Income funds since early 2011. Lower-than-expected 
inflation numbers released by Statistics Canada had a negative impact on the 
performance of real-return bond funds. Also, the Bank of Canada's long-term 
bond yields ticked higher, which caused the DEX Long Term Bond Index to lose 
2% for the month," Xiao said. 
For more on January fund performance, go to 
Morningstar Canada's preliminary fund performance figures are based on change 
in funds' net asset values per share during the month, and do not necessarily 
include end-of-month income distributions. Final performance figures will be 
published on next week. 
About Morningstar Research Inc. and Morningstar, Inc.
Morningstar Research Inc. is a Canadian subsidiary of Chicago-based 
Morningstar, Inc., a leading provider of independent investment research in 
North America, Europe, Australia, and Asia. The company offers an extensive 
line of products and services for individuals, financial advisors, and 
institutions. Morningstar provides data on more than 385,000 investment 
offerings, including stocks, mutual funds, and similar vehicles, along with 
real-time global market data on more than 8 million equities, indexes, 
futures, options, commodities, and precious metals, in addition to foreign 
exchange and Treasury markets. Morningstar also offers investment management 
services through its registered investment advisor subsidiaries and has 
approximately US$195 billion in assets under advisement or management as of 
Sept. 30, 2012. The company has operations in 27 countries. 
Joanne Xiao, Fund Analyst, Morningstar Canada, (416) 484-7004; Christian  
Charest, Editor, Morningstar Canada, (416) 484-7817 
SOURCE: Morningstar Research Inc. 
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CO: Morningstar Research Inc.
ST: Ontario
-0- Feb/04/2013 12:00 GMT
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