TORONTO, Sept. 5, 2012 /CNW/ - The Canadian economy's three largest sectors -- financials, energy and materials -- all posted solid returns in August, leading to gains for the investment funds that target those sectors as well as for broader domestic equity funds. European and U.S. equity funds also did well for the month, but those that focus on Asian equity markets had negative results, according to preliminary performance numbers released today by Morningstar Canada.
By far the best performer among the 42 Morningstar Canada Fund Indices was the one that follows the Precious Metals Equity category, which saw a 10.1% increase in August. "Gold and silver turned sharply upward in the last third of the month, nearly hitting US$1,700 and US$31 per ounce, respectively. Speculation on additional quantitative easing in the United States led to demand for the metals, as the prospect of a weakening dollar meant expectations of rising prices," said Morningstar Fund Analyst Adam Fisch.
In second place, the Morningstar Natural Resources Equity Fund Index, which was also the second-best performer in July, had another good month in August with a 3.1% increase, while the fund index that tracks the Financial Services Equity category finished the month in fifth place with a 2.2% increase.
The success of these three industry sectors also meant good news for funds in the diversified domestic equity categories; the Morningstar Canadian Equity Fund Index, whose constituent funds allocate on average nearly three-quarters of their portfolios to these sectors, increased by 2.4%. Meanwhile, the Canadian Small/Mid Cap Equity, Canadian Focused Small/Mid Cap Equity, and Canadian Dividend & Income Equity fund indices saw increases of 2.1%, 1.8%, and 1%, respectively.South of the border, the S&P 500 Index approached its highest level in four years, ending the month with a 2.3% gain when expressed in U.S. dollars. For Canadian investors, this translated into a 1.5% increase for the Morningstar U.S. Equity Fund Index after accounting for unfavourable currency effects. Funds in the U.S. Small/Mid Cap Equity category did even better with an average increase of 2.4% for the month.