Small and mid caps stand out in flat November for funds

The Canadian dollar resumes its slide against its U.S. counterpart, but continues to strengthen against the euro.

Jess Morgan 2 December, 2015 | 6:00PM

After rebounding from big losses in September to strong gains in October, mutual funds in Canada came in flat in November. Twenty-five of the 42 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories, posted gains during the month, with only nine indices posting gains of 1% or more, according to preliminary data released today by Morningstar Canada.

This month's top-performing fund index was the one that tracks the U.S. Small/Mid Cap Equity category, which increased by 2.9%. All four small/mid cap equity categories tracked by Morningstar were among the best performers in November; the Morningstar Global Small/Mid Cap Equity and Canadian Small/Mid Cap Equity fund indices were tied for fourth overall with a 1.3% increase, followed closely by Canadian Focused Small/Mid Cap Equity, up 1.2%.

Fund indices tracking natural resources categories were November's worst performers, with Precious Metals Equity suffering a decline of 5.5%, followed by Natural Resources Equity at -2.2% and Energy Equity at -1.6%. These are modest losses compared to the double-digit declines posted in the third quarter of 2015. However, this is disappointing news for investors who hoped for their five- and six-point gains in October to continue.

Among large-capitalization, sector-diversified equity fund categories, U.S. Equity fared best with a gain of 1.9%, followed by Global Equity and European Equity at 1.2% each. The Asia Pacific Equity and Asia Pacific ex-Japan Equity fund indices had middle-of-the-pack performance in November with increases of 0.7% and 0.6%, respectively, while the Morningstar Emerging Markets Equity Fund Index saw the biggest decline in this space, down by 1.0%.

Market results were mixed in Asia, with Japan's Nikkei Index posting an impressive 4.9% gain for the month, while the Shanghai Composite Index was up 2.2%. However, stock market indexes for Hong Kong, Taiwan and South Korea were all slightly negative. In Europe, Germany's DAX was the standout performer with a 4.7% increase, while France's CAC 40 and the UK's FTSE 100 both posted small gains. The biggest currency impacts for Canadian investors were the Canadian dollar's 2.6% appreciation against the euro, which detracted from the performance of European Equity funds, and the loonie's 1.9% decline against the U.S. dollar, which contributed positively to U.S. Equity funds' returns, as U.S. markets were flat for the month.

Most fixed-income fund categories tracked by Morningstar moved by less than a percentage point this month. The best performer in this space was the Morningstar Canadian Inflation Protected Fixed Income Fund Index, up by 0.8%, while the worst fixed-income performers were Preferred Share Fixed Income at -1.0% and High Yield Fixed Income at -1.1%.

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.

 

Fund Indices 1 month
U.S. Small/Mid Cap Equity   2.9
Financial Services Equity   2.0
U.S. Equity   1.9
Canadian Small/Mid Cap Equity   1.3
Global Small/Mid Cap Equity   1.3
Global Equity   1.2
European Equity   1.2
Cdn Focused Small/Mid Cap Equity   1.2
International Equity   1.1
North American Equity   0.8
Cdn Inflation-Protected Fixed Income   0.8
Global Equity Balanced   0.7
Canadian Focused Equity   0.7
Asia Pacific Equity   0.7
2025+ Target Date Portfolio   0.7
Asia Pacific ex-Japan Equity   0.6
Global Neutral Balanced   0.4
2015 Target Date Portfolio   0.4
Canadian Equity   0.3
Canadian Long Term Fixed Income   0.3
2025 Target Date Portfolio   0.3
2020 Target Date Portfolio   0.2
Global Fixed Income   0.2
Tactical Balanced   0.1
Canadian Fixed Income Balanced   0.0
Canadian Equity Balanced   0.0
Canadian Neutral Balanced   0.0
Canadian Fixed Income   0.0
U.S. Money Market   0.0
Canadian Money Market   0.0
Canadian Synthetic Money Market   0.0
Canadian Short Term Fixed Income   0.0
Global Fixed Income Balanced   0.0
Greater China Equity   -0.3
Canadian Dividend & Income Equity   -0.6
Emerging Markets Equity   -1.0
Preferred Share Fixed Income   -1.0
High Yield Fixed Income   -1.1
Real Estate Equity   -1.2
Energy Equity   -1.6
Natural Resources Equity   -2.2
Precious Metals Equity   -5.5
Data as of Nov. 30, 2015

About Author

Jess Morgan

Jess Morgan  Jess Morgan is the associate editor of Morningstar Canada’s website. She began her career as a television producer and freelance writer, often making appearances on TV and radio as a commentator on politics and culture. She holds a BA in communications from the University of Winnipeg and a diploma in Creative Communications from Red River College.