A surge in the energy sector made it the best-performing fund category among Morningstar Canada's fund indices
Advances in the energy sector drove increases in several equity fund categories in April, according to Morningstar Canada’s preliminary performance report for the month.
Based on aggregate returns, the Morningstar Energy Equity Fund Index was the top-performing category among Morningstar Canada’s 47 fund categories last month, following up on its 3.1% March increase with a 10.6% surge in April.
“Funds in this category have been greatly helped by a resurgence in the price of crude oil, which went from a low near US$60 in early March to nearly US$69 by the end of April,” Morningstar Canada said.
The second best performer, the Morningstar Natural Resources Equity Fund Index, gained 6% in April thanks also in large part to its constituent funds’ stakes in energy stocks. Diversified Canadian equity funds, meanwhile, were buoyed by their large energy allocation to snap a three-month losing streak.
“But while the S&P/TSX Capped Energy sub-index was up 12.3% for the month, the other two large sectors of the Canadian economy—financial services and basic materials—were both up less than 1%,” Morningstar Canada said. “As a result, the S&P/TSX Composite Index produced a more muted 1.8% total return in April.”
The Canadian Small/Mid Cap Equity category was the best-performing domestic equity fund index, inching up 1.9% in April. This was followed closely by Canadian Equity (1.6%), Canadian Focused Small/Mid Cap Equity (1.4%), and Canadian Focused Equity (1.1%).
Taking the third spot, the Morningstar European Equity Fund Index went up 2.1% as market indices in France, Germany, and the UK all gained between 4% and 7%. But stock-market gains for Canadians in this index were more muted as the oil-driven Canadian dollar appreciated against many world currencies.
That has also caused the US Equity category to slip by 0.1% in spite of the S&P 500’s 0.4% return in April. The US Small/Mid Cap Equity fund index slid 0.3%, while the Global Equity fund index inched up 0.1% for the month.
Emerging Markets Equity funds were hardest hit by currency effects, declining by 2%. Asia Pacific ex-Japan Equity, Asia Pacific Equity, and Greater China Equity, all ended April in the red with losses of 1.8%, 0.8%, and 0.7%, respectively.
On the fixed-income side, Morningstar Canada introduced three new categories and redefined existing fixed-income categories, following prescriptions by the Canadian Investment Funds Standards Committee.
“In their initial month of assessment, the new fund indices tracking the Canadian Corporate Fixed Income and Global Corporate Fixed Income categories both decreased 0.6%, while the Emerging Markets Fixed Income fund index was down 2.3%,” the firm said.
