Foreign equity funds continue to climb in November

Most fund categories post small gains; Canadian equity funds trail foreign peers.

Christian Charest 4 December, 2017 | 6:00PM
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After posting impressive gains across the board in October, mutual funds in Canada followed up in November with more muted but still overwhelmingly positive results. Thirty-nine of the 44 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories, were up for the month, though nearly all of them gained under 2%. Meanwhile, the five losing indices decreased by only 0.1% to 0.7%, according to preliminary performance data released today by Morningstar Canada.

The best-performing fund index for the month was the one that tracks the U.S. Equity category, which gained 2.9%, though it underperformed the S&P 500 Index which had a total return of 3.1% for the month. In second place, the U.S. Small/Mid Cap Equity Fund Index gained 2.5% in November but also underperformed this fund category's market benchmark, the Russell 2000 Index, which had a total return of 2.9%. Currency effects between the Canadian and U.S. dollars were negligible over the period, with the loonie gaining just three one-hundredths of a cent.

Among sector-diversified fund categories, the ones that have a large dose of U.S. stocks had an edge in November. Finishing in the top 10 was the fund index that tracks the Global Small/Mid Cap Equity category with a 2.0% increase, as well as the North American Equity and Global Equity fund indices, both up 1.7%. Funds in all three of these categories typically hold approximately half their assets in U.S. equities.

Three sector-equity fund indices were also among the top 10: Real Estate Equity ranked third overall with a 2.3% gain, while Financial Services Equity and Global Infrastructure Equity were both up 1.3% for the month.

Domestic equity funds had weak but mostly positive results in November, reflecting the 0.5% total return of the S&P/TSX Composite Index. The Morningstar Canadian Equity Fund Index increased 0.3%, while the Canadian Focused Small/Mid Cap Equity, Canadian Focused Equity and Canadian Dividend & Income Equity fund indices were up 0.9%, 0.7% and 0.6%, respectively. The only domestic equity fund index to lose ground in November was Canadian Small/Mid Cap Equity, down 0.3%.

The worst-performing fund indices were the ones that track the Precious Metals Equity and the Energy Equity fund categories, decreasing 0.5% and 0.7%, respectively. The other two fund indices in the red for the month were High Yield Fixed Income and European Equity, down 0.1% and 0.2%, respectively.

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.

Fund Indices 1 month
U.S. Equity   2.9
U.S. Small/Mid Cap Equity   2.5
Real Estate Equity   2.3
Global Small/Mid Cap Equity   2.0
Canadian Long Term Fixed Income   1.8
North American Equity   1.7
Global Equity   1.7
Financial Services Equity   1.3
Global Infrastructure Equity   1.3
Cdn Inflation-Protected Fixed Income   1.3
Asia Pacific Equity   1.2
2035+ Target Date Portfolio   1.2
2035 Target Date Portfolio   1.1
2030 Target Date Portfolio   1.1
Asia Pacific ex-Japan Equity   1.1
Global Equity Balanced   1.1
Greater China Equity   1.1
Cdn Focused Small/Mid Cap Equity   0.9
2025 Target Date Portfolio   0.9
Global Neutral Balanced   0.9
Canadian Neutral Balanced   0.7
Canadian Focused Equity   0.7
Global Fixed Income Balanced   0.7
Canadian Fixed Income   0.6
Preferred Share Fixed Income   0.6
Canadian Fixed Income Balanced   0.6
Canadian Dividend & Income Equity   0.6
Short-Term Target Date   0.6
International Equity   0.5
Tactical Balanced   0.5
Canadian Equity Balanced   0.4
Canadian Equity   0.3
Emerging Markets Equity   0.3
Canadian Short Term Fixed Income   0.2
Floating Rate Loans   0.1
Natural Resources Equity   0.1
Global Fixed Income   0.1
Canadian Money Market   0.0
U.S. Money Market   0.0
High Yield Fixed Income   -0.1
European Equity   -0.2
Canadian Small/Mid Cap Equity   -0.3
Precious Metals Equity   -0.5
Energy Equity   -0.7
Data as of Nov. 30, 2017


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Christian Charest

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