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Slumping Loonie Boosts Foreign Equity Funds in April 2017, Morningstar Canada Data Show

TORONTO, May 2, 2017—Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ: MORN), today released preliminary April 2017 performance data for its 44 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories. Thirty-eight of the 44 fund indices increased during the month, including 18 indices that increased by more than 2%.

Highlights from Morningstar's April 2017 preliminary performance report include:

  • The Canadian dollar depreciated against all major world currencies due in part to falling oil prices and speculation over the future of trade agreements with the United States. These currency movements provided a boost to funds that focus on foreign equities and do not hedge their currency exposure.
  • The steepest decline for the loonie was against the euro and the British pound, depreciating 4.5% and 5.8%, respectively. Combined with modest gains on European stock markets, this led to strong performance for funds in the European Equity category, as measured by the Morningstar European Equity Fund Index, which was the top-performing fund index in April with an increase of 6.0%.
  • Favourable currency effects and market gains also combined to produce good results for Asian equity funds. The Morningstar Asia Pacific ex-Japan Equity Fund Index was the second-best performer overall with a 5.1% increase, while Emerging Markets Equity was up 4.7%, and Greater China Equity and Asia Pacific Equity were both up 4.4%. Stock indexes in Hong Kong and Seoul were both up by 2.1%, and Japan's Nikkei 225 Index was up by 1.5% for the month, while the Hong Kong dollar, the Chinese renminbi and the Japanese yen all appreciated by approximately 2.6% against the Canadian dollar.
  • In the United States, the SandP 500 Index had a total return of 1.0% while the U.S. dollar appreciated by 2.6% against the loonie. As a result, funds in the U.S. Equity category produced an aggregate gain of 3.0%. The U.S. Small/Mid Cap Equity Fund Index increased 2.5% for the month.
  • In Canada, the SandP/TSX Composite Index produced a total return of 0.4% despite losses in the country's three largest stock sectors: The energy, financials, and materials sub-indexes lost 1.8%, 1.4%, and 0.3%, respectively. Funds in the Canadian Equity category remained positive in aggregate but were near the bottom of the April performance ranking with a 0.7% increase. The Morningstar Canadian Focused Equity Fund Index performed slightly better with a 1.4% increase, while funds in the Canadian Small/Mid Cap Equity category, which typically contain a larger stake in natural resources stocks than their large-cap counterparts, decreased by 0.6%.
  • The worst performers in April were fund indices that track sector-specific categories. Energy Equity, Natural Resources Equity, and Precious Metals Equity decreased 2.9%, 2.3%, and 1.9%, respectively, while Financial Services Equity was down 1.4%.

To view the complete report about Morningstar's preliminary April 2017 performance data for Canadian funds, please visit https://goo.gl/CHdQrc.

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$200 billion in assets under advisement and management as of March 31, 2017. The company has operations in 27 countries.

©2017 Morningstar, Inc. All rights reserved.

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