April 3, 2018

Falling Loonie Keeps Foreign Equity Funds Afloat in First Quarter, Morningstar Canada Data Show

TORONTO, April 3, 2018 /PRNewswire/ -- Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ: MORN), today released preliminary 2018 first-quarter performance data for its 44 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories. Nineteen of the 44 fund indices increased during the quarter, including eight indices that increased by 1% or more.

Highlights from Morningstar's 2018 first-quarter preliminary performance report include:

  • The best performer among the 44 Morningstar Canada Fund Indices was the one that tracks the Greater China Equity category, with a 4.1% increase. The fund index had an exceptional month in January, increasing 8.7%, but was in the red for the two subsequent months, decreasing 2.5% in February and 1.7% in March. Fund returns in that category were heavily influenced by currency effects, with the Canadian dollar depreciating 6.0% against the Chinese renminbi and 2.3% against the Hong Kong dollar over the quarter, which is beneficial for Canadian investors in foreign securities.
  • Other fund indices that focus on stocks in the Asia/Pacific region also performed well in the first quarter, including Asia Pacific Equity and Asia Pacific ex-Japan Equity, which both increased 2.7%, as well as Emerging Markets Equity, which increased 3.7%.
  • European equity funds also benefited from favourable currency movements, with the loonie depreciating 5.1% against the euro and 6.3% against the UK pound. This was enough to counter the negative performance of European stock markets, which saw the UK's FTSE 100, Germany's DAX Index, and France's CAC 40 drop 8.4%, 6.4%, and 2.7%, respectively, over the quarter. As a result, the Morningstar European Equity Fund Index remained in positive territory with a 0.2% increase for the three-month period.
  • In the United States, the S&P 500 Index saw its strong gains from January erased by steep declines in February and March and ended the quarter down 0.8%. For Canadian fund investors, however, that market performance combined with the loonie's 2.7% decline against the U.S. dollar translated into an average gain of 1.1% for funds in the U.S. Equity category.
  • In Canada, the S&P/TSX Composite Index started the year with three months of negative performance, resulting in a 4.4% decrease for the Morningstar Canadian Equity Fund Index over the quarter. While the energy sector rebounded in March, the three largest sectors in the Canadian market—financial services, basic materials, and energy—suffered steep losses in February that they were unable to recuperate by the end of the quarter.
  • The worst-performing fund indices in the quarter were Precious Metals Equity, Natural Resources Equity, and Energy Equity, which decreased 5.7%, 6.1%, and 6.7%, respectively.

To view the complete report about Morningstar's preliminary 2018 first-quarter performance data for Canadian funds, please visit https://goo.gl/5Uc5t3.

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 and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than US$195 billion in assets under advisement and management as of Dec. 31, 2017. The company has operations in 27 countries. 

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Christian Charest, +1 416 484-7817 or christian.charest@morningstar.com

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