Political upheavel in Tunisia and Egypt helped boost Canadian mutual fund returns in January, on fears that Middle East oil supplies could be disrupted, according to a preliminary report from Morningstar Canada.
“Concerns grew that protests could spread to larger oil-producing countries and that supplies through the Suez Canal and Sumed oil pipeline could be disrupted,” said Esko Mickels, fund analyst for Morningstar Canada. “This combined with growing demand to push the price of Brent crude, the international benchmark, beyond the US$100 barrier for the first time since 2008.”
Despite the gains in oil prices, the best returns were found in the Science & Technology Equity category, which posted a gain of 4.3%. Strong earnings from Apple and Netflix contributed heavily to that gain.
The Morningstar Canadian Equity Fund Index finished in the middle of the pack with a 1.2% gain, as energy and banking gains outweighed declines in gold stocks. Precious Metals funds were the worst performing group in January, posting a 10.7% loss, as bullion prices fell.
European Equity funds returned 3.7% as a group, with most of these returns coming from the rising value of the euro and British pound against the loonie. Currency volatility also boosted returns in the International Equity category, where funds usually have about 50% exposure to Europe.
The Morningstar U.S. Equity Fund Index picked up 2.6%, thanks in part to a 2.4% gain on the S&P 500 Index, and in part due to a 0.8% appreciation of the U.S. dollar versus the Canadian currency.