(July 20, 2004) After years of poor economic performance, Japan topped the list of investment destinations in the first half of 2004, according to Morningstar Canada.
The Morningstar Canada Japanese Equity Fund Index is up 15.8% year-to-date, well ahead of the second-place European Equity Fund Index, which has gained 7.5% over the same period.
The Japanese index was certainly helped by its top performer, the AGF Aggressive Japan Class, which returned 31.3% thanks to its focus on Japanese small- and mid-cap stocks.
Morningstar’s U.S. equity index performed relatively poorly, returning 4.8% over six months, while the Canadian equity fund index returned 4.4%. Canadian small-cap stocks delivered the best returns, with the Morningstar Index up 6.3%.
In Canada, there was no shortage of shares of companies from the health care sector, which gained 9.9%. However, investors abandoned precious metals funds and the index fell by 19.7%. In the fixed-income space, high-yield bond funds performed best and topped the charts, recording an index increase of 2.3%. The remaining bond category returned less than 1%.
The worst performer was the Asia ex-Japan index, which lost 1%. Asian funds that have reduced their investments in Japan have seen poor results as the benchmark Nikkei index is currently the best performer on a year-to-date basis. Hang Seng levels in Hong Kong have been declining since the beginning of the year, following a period of increase in 2003.
Asia-Pacific funds that are required to include Japanese shares were gobbled up by the rest of the region, with an index return of just 1.7%.
The global equity index and the international equity index both performed in the 7% range, with the key difference between the two indices being that global funds include US investments.
The Emerging Markets Equity Fund Index gained 1.3% and the Latin America Equity Fund Index rose 2.4%.
Morningstar Canada Fund Indexes are weighted averages of fund total returns across 32 different categories. In addition to the rates of return on all funds in a given category, separate rates of return on indices for mutual funds and segregated funds are also reported.
Submitted by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(20/07/04)
