TORONTO, Jan. 3, 2013 /CNW/ - Equity funds in Canada ended 2012 with mostly positive returns, with strong performances from those that target European and Asian markets in particular. Canadian equity funds were also in positive territory for the year but lagged their foreign counterparts, according to preliminary performance numbers released today by Morningstar Canada. The Morningstar Canada Fund Indices that measure the aggregate returns of funds in the European Equity, Asia ex-Japan Equity, Greater China Equity, and Asia Pacific Equity categories were among the best performers with increases of 18.3%, 16%, 15.5%, and 15%, respectively, in 2012. Also posting double-digit increases for the year were the International Equity, Emerging Markets Equity, Global Equity, and U.S. Equity fund indices. The five domestic equity fund indices posted increases ranging from 5% for the Morningstar Canadian Small/Mid Cap Equity Fund Index to 8.1% for the Morningstar Canadian Dividend and Income Equity Fund Index. While these numbers were respectable on an absolute basis, they were among the weakest relative to other sector-diversified fund indices in 2012. The Canadian equity market exhibited a stark contrast between a red-hot financial services sector and poorly performing energy and materials sectors; together these three industry groups account for nearly 80% of the S&P/TSX Composite Index. The financials sector in Canada increased by 17.1% in 2012, while energy and materials were down 4.8% and 5.7%, respectively, as measured by the S&P/TSX sub-indices. Sector-specific fund indices were prominent among both the best and worst performers for the year. First overall was the Morningstar Health Care Equity Fund Index with a 20.6% increase, while Real Estate Equity and Financial Services Equity also fared well with increases of 17% and 15.2%, respectively.