October seems to have been a positive month for mutual funds in Canada — especially for the stock funds that invested outside the country.
According to a preliminary report from Morningstar, all but one of its 44 Canada fund indices in October. Nine rose by more than 4%, and the majority saw increases between 2% and 4% during the month.
The firm reported that the loonie underwent significant depreciation against many world currencies. It lost around 2% against both the Euro and the UK pound, and it shed more than 3% against the greenback and most major Asian currencies. This provided an additional lift for foreign equity and fixed-income funds, which had already gained from strong market returns during the month.
The strongest performance came from the Asia-Pacific Equity fund index, which posted a 7.7% increase. Aside from the currency effect, funds under the category were buoyed by the Nikkei 225 Index’s October gain of 8.1% (measured in local currency). South Korean equities also contributed significantly, with the KOSPI Composite Index gaining 5.4% and the South Korean currency appreciating by 5.9% against the loonie.
The second-best performer, the Asia Pacific ex-Japan Equity index, rose by 7.1%. Most funds in this category invest the majority of their assets in South Korea and Greater China; indexes that track the Shanghai, Hong Kong, and Taiwan stock markets were up 1.3%, 2.5%, and 4.5%, respectively. Morningstar’s Greater China Equity Fund and Emerging Markets Equity Fund indices took third and fourth place, respectively, with increases of 6.6% and 5.4%.
The US Equity Fund Index rose 4.7% off of a 2.3% total return for the S&P 500, reflecting the persistent rally in US stocks
, and a 3.3% appreciation of the US dollar against the loonie. The Morningstar Canadian Equity Fund Index, meanwhile, advanced 2.9%, surpassing the S&P/TSX Composite Index’s total return of 2.7%. October was a solid month for Canadian stocks as the index breached 16,000 for the first time
Meanwhile, sector-fund tracking indices performed dismally in October. The worst performer overall was Precious Metals Equity, posting the only negative result of -2.2%. Energy Equity went up 1.4% — a stark contrast to its gains in September. A gain of 2.4% was observed across Real Estate Equity, Global Infrastructure Equity, and Natural Resources indices.
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