TORONTO, Oct. 2, 2012 /CNW/ - September saw increases across the board for the Morningstar Canada Fund Indices, with positive monthly returns helping some categories achieve strong quarterly performance and leaving only one fund index in negative territory in the third quarter.
"Bold efforts by central banks to bolster global growth have instilled some confidence in equity investors, despite persistent fundamental economic concerns," Morningstar Fund Analyst Nick Dedes said.
The biggest increases in the month among the 42 benchmarks came from some of the most volatile sectors, including the best one-month performance: a return of 11.7% logged by the Precious Metals Equity category. Precious metals funds were also the leaders for the third quarter, as the index rose 19.5% in the past three months, according to preliminary performance numbers today released by Morningstar Canada.
"Longer-term inflationary pressure of major stimulus efforts was a boon for precious metals, which also benefited from a drop in the U.S. dollar," Dedes said, pointing out that gold climbed more than 10% and silver jumped more than 25% in the third quarter.Natural Resources Equity funds ranked second in the quarter, with the index increasing 11.5%. A one-month surge of 5.6% contributed to the category's quarterly performance. The performance of these sectors and stocks in general have been aided by the U.S. Federal Reserve's announcement of further asset purchases and its expectation for exceptionally low short-term interest rates through at least 2015, along with the European Central Bank's announcement of an unlimited bond-buying program for distressed government bonds. "These stimulative measures have had a big impact on categories that traditionally exhibit high volatility and, in many cases, are highly levered to prospective economic growth," Dedes said. On the domestic front, strength in the resources and financial services sectors helped carry the S&P/TSX Composite Index to increases of 3.4% in September and 7% over the last three months. Funds that invest in Canadian stocks posted solid gains in September, with the Morningstar Canadian Small/Mid Cap Equity Index increasing by 7.3% to rank third for the quarter. By comparison, the Canadian Focused Small/Mid Cap and Canadian Equity indices each rose 3% in September alone, making for increases of 6.1% and 5.9%, respectively, in the third quarter.