By Morningstar, Inc., Special for USDR
Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ: MORN), today released preliminary second-quarter 2016 performance data for its 42 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories. Thirty-nine of the 42 Fund Indices increased during the quarter, including 10 indices that increased by 3% or more.
Highlights from Morningstar’s second-quarter 2016 preliminary performance report include:
- While the end of June saw increased volatility on worldwide stock and bond markets in the wake of the Brexit vote that will see the United Kingdom leave the European Union, most fund categories had flat performance for the month, with thirty-four of the 42 Morningstar Canada Fund Indices posting returns between 2% and -2%. Twelve of the 21 Fund Indices that track equity categories were down in June, though for nine indices the losses were limited to less than 2%.
- The best performer for the month of June was the fund index that tracks the Precious Metals Equity category, which added 19.9% to its already impressive year-to-date performance. Funds in this category were also the top performers for the quarter with a 42.9% increase; year to date the Morningstar Precious Metals Equity Fund Index has increased a staggering 98.3%. The second-best performer for both the month of June and the second quarter was the Morningstar Natural Resources Equity Fund Index, which increased 4.7% and 18.3%, respectively.
- In Canada, the S&P/TSX Composite Index had three consecutive months in positive territory, ending the second quarter up 5.1%. The energy and materials sectors were the biggest contributors to Canadian stock market performance, while the financial services sector was a detractor. Funds in the Canadian Equity category followed the pace of the benchmark but underperformed, with the Morningstar Canadian Equity Fund Index posting a 3.3% increase for the quarter. The fund indices that track the Canadian Small/Mid Cap Equity and Canadian Focused Small/Mid Cap Equity categories did better, increasing 6.8% and 3.5%, respectively, while the Canadian Dividend & Income Equity and Canadian Focused Equity fund indices were up 2.4% and 1.8%, respectively.
- Funds in the U.S. Equity category also underperformed their benchmark during the second quarter, collectively posting a 1.7% increase compared to 2.5% for the S&P 500 Index. While the net currency movement between the Canadian and U.S. dollars was minimal for the quarter, it was a very volatile period that may have adversely affected funds that do not hedge their currency exposures.
- The worst-performing fund index for both the month and the quarter was the one that tracks the European Equity category, which decreased 5.6% in June and 3.2% in the second quarter. Stock markets in France and Germany suffered losses of around 6% in June and were down 3% to 3.5% for the quarter. And while the United Kingdom’s FTSE 100 Index was one of the best performers among major developed markets with a 5.3% increase in the second quarter, the pound sterling depreciated by 7.7% against the Canadian dollar during that time, to the detriment of Canadian investors.
- Among other sector-diversified foreign-equity fund categories, the best performers were Asia Pacific Equity and Emerging Markets Equity, both up 2.2% for the quarter. The Morningstar Asia Pacific ex-Japan Equity Fund Index increased 1.1% and the Morningstar Global Equity Fund Index was up 0.9%. The International Equity fund index, which has hefty exposure to European stocks, suffered a 3.7% decrease in June and was the second-worst performer for the quarter with a 0.9% decrease.
- Fixed income funds had a strong rally in June, as market uncertainty signalled a potential delay in rate increases by central banks. The Morningstar Canadian Long Term Fixed Income Fund Index increased 3.8% for the month and ended the quarter up 5.4%. The High Yield Fixed Income, Canadian Inflation-Protected Fixed Income, and Canadian Fixed Income fund indices also did well with increases of 3.6%, 3.1%, and 2.3%, respectively, for the quarter.
To view the complete report about Morningstar’s preliminary second-quarter 2016 performance data for Canadian funds, please visit http://tr.im/1QJjF.
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 www.morningstar.ca 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 individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar provides data on approximately 525,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 18 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 investment advisory subsidiaries, with more than US$180 billion in assets under advisement or management as of March 31, 2016. The company has operations in 27 countries.
SOURCE Morningstar, Inc.