Christian Charest: Preliminary performance numbers are in for investment funds in Canada for the month of November, and overall, it was mostly a positive month with 16 of the 24 Morningstar Canada Fund Indices that track equity categories posting gains for the month. I'm here with Adam Fisch, Morningstar Canada Fund Analyst, to talk about these results.
Now, Adam, an interesting thing that we saw this month was – sector funds were both at the top and at the bottom of the performance rankings. So, let's start with the positive – Financial Services Equity, the category was the best performer for the month with a 2.2% return. What happened with financials?
Adam Fisch: Well, that sector really is guided one way or the other by the performance of the big six banks. In November, there was some positive expectations about bank earnings that were going to be released, around the end of November, beginning of December. And so the movement in the market really reflected that, at least in RBC's case so far they were the first to report, those positive expectations were well founded.
Charest: And at the other end of the performance spectrum, unfortunately, we saw the other major sector in the Canadian economy, natural resources didn't fare so well. The Morningstar Natural Resources Equity Fund Index lost 4.3%, the Precious Metals Equity Index lost 9.2%, what happened with resources last month?
Fisch: Well, those are kind of some of the more risky categories and there was a drop-off in the markets around the world after the election, some of the riskier categories really had trouble gaining back what had been lost. In the case of precious metals, compounding that problem in Canada was some companies specific news – IAMGOLD announced earnings that were below expectations. Barrick, readjusted to the low end of expectations. So, that weighed on things as well.
Charest: Now, the net result for diversified Canadian equity funds – we saw the good performance of financials, the bad performance of resources, they sort of cancelled each other out. So, the diversified categories had slightly negative returns, but certainly not catastrophic. We're looking at the loss of 0.1% for the Canadian Dividend & Income Equity category, all the way down to minus 2% for Canadian Small/Mid Cap Equity.
Fisch: Yeah. As I mentioned there was a big drop-off mid-month just after the election right up until the fifteenth, sixteeth of the month – talking about TSX hitting four-month lows. In a lot of cases, in a lot of sectors, much of those losses were made up between then and the end of the month, but some had more trouble than others.
Charest: Okay. Now, switching gears a little bit, let's talk about Foreign Equity Funds. They just keep chugging along and they have very positive results once again – we're looking at the Asia-Pacific ex-Japan Equity Category that had a 1.8% return, Japanese Equity, European Equity both up 1.6%, International Equity 1.5%. So, things are looking good for Foreign Equity Funds.
Fisch: Yeah. Once again those categories had a good month. And in the case of Europe, we saw Germany approve a bailout tranche for Greece. So, as the positive news comes out, it's giving investors some confidence that maybe they'll get out of the woods yet.
Charest: Thank you, Adam. And for more on Morningstar's survey of fund performance for the month of November, please click on the link right below the video player. Check back with us regularly for more news and updates.
