|Surging Natural Resources Lead to Strong Returns for Canadian Equity Funds in 2016, Morningstar Canada Data Show|
|TORONTO, Jan. 4, 2017—Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ: MORN), today released preliminary 2016 year-end performance data for its 44 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories. Thirty-nine of the 44 fund indices increased during the calendar year, including 10 indices that increased 10% or more.|
Highlights from Morningstar's 2016 year-end preliminary performance report include:
All eight fund indices that track fixed-income categories were up for the year, though many decreased during the fourth quarter. The best-performing fund indices in this area were High Yield Fixed Income, Floating Rate Loans, and Preferred Share Fixed Income, increasing 9.1%, 8.0%, and 7.1%, respectively. The two categories most sensitive to interest rates—Canadian Long Term Fixed Income and Canadian Inflation-Protected Fixed Income—had both been increasing steadily since the start of the year but suffered losses in each of the past three months, finishing with increases of 1.7% and 1.8%, respectively, for the year.
Canadian stocks had their best calendar-year performance since 2009, with the SandP/TSX Composite Index posting a total return of 21.1%. The five Morningstar Canada Fund Indices that track domestic equity fund categories all ended the year among the best performers, with increases ranging from 11.8% for the Morningstar Canadian Focused Equity Fund Index to 17.9% for the Morningstar Canadian Dividend and Income Equity Fund Index. The fund index that tracks the purely domestic Canadian Equity category increased 17.7%, underperforming the benchmark.
Canada's three largest sectors—financial services, energy, and basic materials—all contributed positively with total returns of 24.2%, 39.6%, and 41.2%, respectively. As a result, the best-performing fund indices overall were the ones that track four sector-specific fund categories: Precious Metals Equity, Natural Resources Equity, Energy Equity, and Financial Services Equity, up 54.0%, 41.0%, 36.1%, and 24.3%, respectively.
Currency effects detracted from performance for most foreign-equity fund categories during the year, as the Canadian dollar appreciated against many of the world's major currencies. This was most notable in the European Equity category, where funds collectively lost 5.5% despite strong market performances in France, Germany, and the United Kingdom; the loonie gained 6.1% against the euro and 23.2% against the UK pound during the year, pushing European Equity funds to the bottom of the 2016 performance table.
In the United States, the SandP 500 Index had a total return of 12.0%, but funds in the U.S. Equity category significantly underperformed, with the Morningstar U.S. Equity Fund Index increasing just 6.4% for the year. Currency movements only explain part of the underperformance, as the Canadian dollar appreciated 3.1% versus its U.S. counterpart.
The only major market to post a negative performance in 2016 was China, where the Shanghai Composite Index decreased 12.3%. This was partially offset by gains on the Hong Kong and Taiwan markets, but the Morningstar Greater China Equity and International Equity fund indices nevertheless ended among the year's worst performers with decreases of 3.8% and 5.1%, respectively.
To view the complete report about Morningstar's preliminary 2016 year-end performance data for Canadian funds, please visit http://tr.im/1YjQA.
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 on nearly 540,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on approximately 18.5 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than US$200 billion in assets under advisement or management as of Sept. 30, 2016. The company has operations in 27 countries.
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