Gold funds shine once again in April

With 12.2% return, Morningstar Precious Metals Equity Fund Index proved to be the best performer for the second time in the past three months, the report said. Thirty-six of the 43 Morningstar Canada Fund Indices had positive returns in April, though 22 of them gained less than 1%.

The three fund indices that track small/mid-cap equity categories posted returns in the top five for the month. In the second place was the Morningstar U.S. Small/Mid Cap Equity Fund Index with a 4% gain, while its Canadian and Global counterparts were fourth and fifth with gains of 2.7% and 2.3%, respectively. The Morningstar Natural Resources Equity Fund Index came third with a gain of 2.9%, the survey reported.

Among large-cap equity categories, North America was the place to be in April. Canada’s S&P/TSX Composite Index posted 1.7% return for the month, edging ahead of the S&P 500 Index’s 1.6%, when measured in U.S. dollars.

The exchange rate between the Canadian and U.S. dollars saw considerable volatility during the month, but these currency movements mostly cancelled each other out. As a result, the Morningstar U.S. Equity Fund Index and the Morningstar Canadian Equity Fund Index had very similar gains, at 1.5% and 1.2%, respectively.

It was a different story, however, in the case of Morningstar European Equity Fund Index which lost 2.1% for the month owing to Greece’s deepening crisis and the soaring loonie, which gained 2.1% over the euro.

“April was choppy as markets zigzagged over concerns about Greece’s ability to service its debt, and the contagion spread to Spain and Portugal,” said Mickels. “As a result, currency markets were wobbly and the euro weakened against major currencies.”

The same impact was felt in the International Equity category, which collectively lost 1.6%, and in the Global Equity category, which posted a measly 0.2% gain.

At the bottom of the list was Health Care Equity. Down 2.5%, it was the worst performer among all fund indices.

(05/04/10)