May 2, 2018

Oil Price Surge Boosts Canadian Equity Funds in April 2018, Morningstar Canada Data Show

TORONTO, May 2, 2018 /PRNewswire/ -- Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ: MORN), today released preliminary April 2018 performance data for its 47 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories. Twenty-three of the 47 fund indices increased during the month, with nine of them increasing by more than 1%.

Highlights from Morningstar's April 2018 preliminary performance report include:

  • Funds in the Energy Equity category were the top performers once again, as the Morningstar Energy Equity Fund Index followed up its 3.1% increase in March with a 10.6% surge in April, ranking first among the 47 Morningstar Canada Fund Indices. 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. The Morningstar Natural Resources Equity Fund Index, whose constituent funds also hold large stakes in energy stocks, was the second-best performer in April with a 6.0% increase.
  • After starting 2018 with three consecutive months in the red, diversified Canadian equity funds produced positive results in April, helped by their large allocation to the energy sector. 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%. As a result, the S&P/TSX Composite Index produced a more muted 1.8% total return in April. The best-performing domestic equity fund index was the one that tracks the Canadian Small/Mid Cap Equity category, which increased 1.9% in April, followed by Canadian Equity, Canadian Focused Small/Mid Cap Equity, and Canadian Focused Equity, up 1.6%, 1.4%, and 1.1%, respectively.
  • The Morningstar European Equity Fund Index was the third best with a 2.1% increase. Stocks in Europe produced strong results last month, with market indexes in France, Germany, and the United Kingdom all gaining between 4% and 7%. However, the oil price recovery has translated into an appreciation of the Canadian dollar against many world currencies, including gains of 2.3% and 2.6% against the euro and the pound, respectively, which tempered the stock market gains for Canadians.
  • In the United States, the S&P 500 Index had a total return of 0.4% in April, but for Canadian investors this modest gain was offset by the Canadian dollar's 0.5% appreciation against its U.S. counterpart, leading to a decrease of 0.1% for the fund index that tracks the U.S. Equity category. The U.S. Small/Mid Cap Equity fund index was down 0.3%, while the Global Equity fund index, whose constituent funds on average hold more than half their assets in U.S. stocks, was up 0.1% for the month.
  • The worst-performing equity fund category was Emerging Markets Equity with a 2.0% decrease. Much of the decline was due to currency effects, as stock markets in Latin America and most of Asia had positive results. Other equity fund indices in the red include Asia Pacific ex-Japan Equity, Asia Pacific Equity, and Greater China Equity, down 1.8%, 0.8%, and 0.7%, respectively.
  • April saw the implementation of three new fixed-income fund categories into Morningstar's fund performance evaluation methodology, as well as a redefining of existing fixed-income categories, as prescribed 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%.

To view the complete report about Morningstar's preliminary April 2018 performance data for Canadian funds, please visit https://goo.gl/mj2xgr.

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. is 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, retirement plan providers and sponsors, and institutional investors in the private capital markets. 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$201 billion in assets under advisement and management as of March 31, 2018. The company has operations in 27 countries.

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