Canadian Dollar’s Decline Boosts International Funds in July, Morningstar Canada Data Show

Toronto, ON - 6 August 2015

Morningstar Research Inc., a Canadian subsidiary of Chicago-based independent investment research provider Morningstar, Inc. (NASDAQ:MORN), today released preliminary performance data for July 2015 about its 42 Morningstar Canada Fund Indices, which measure the aggregate returns of funds in various standard categories. Thirty of the 42 Fund Indices increased during the month, including 14 that increased by 2% or more, while five of the Fund Indices that lost ground decreased by more than 4%.

Highlights from Morningstar’s July 2015 preliminary performance report include:

• Funds that focus on U.S. and European equities were last month’s top performers. The Morningstar European Equity Fund Index increased by 6.9%, followed by the Morningstar U.S. Equity Fund Index with a 5.4% increase. European and U.S. markets were up for the month, but for Canadian investors, the bigger contributor to returns was the decline of the Canadian dollar, which depreciated by 4.2% against the U.S. dollar, by 3.3% against the euro, and by 3.8% against the UK pound. Other top-performing equity categories for July, which all benefitted from positive currency effects, include International Equity, Global Equity, U.S. Small/Mid Cap Equity, and Global Small/Mid Cap Equity with increases of 4.9%, 4.5%, 3.7%, and 3.4%, respectively.

• Funds that concentrate on natural resources were once again the worst performers of the month. The Morningstar Precious Metals Equity Fund Index dropped 16.2%, while the indices that track the Natural Resources Equity and Energy Equity categories were down 10.9% and 9.3%, respectively. The SandP/TSX Capped Materials Index dropped 14.5% in July, while the SandP/TSX Capped Energy Index was down 8.9%.

• Diversified Canadian equity funds had middling results in July. The best-performing domestic equity category was Canadian Focused Equity, up 1.3%, followed by Canadian Equity, up 0.5%. The Morningstar Canadian Small/Mid Cap Equity Fund Index was the worst performer among domestic equity categories with a 3.2% decrease. Funds in these categories were hurt by their exposure to natural resources, but other sectors of the Canadian economy—notably financial services—compensated for the shortfall. The SandP/TSX Composite Index posted a 0.3% increase for the month.

• Plummeting Chinese stocks had a powerful effect on the Morningstar Greater China Equity Fund Index last month, resulting in a 6.1% decrease. After a volatile summer, the Shanghai Composite Index dropped 14.3% in July, while markets in Hong Kong and Taiwan were down 6.1% and 7.1%, respectively. The Asia Pacific Equity index fared considerably better with an increase of 2.2%, while Asia Pacific ex-Japan Equity decreased by 0.8%.

Morningstar Canada’s preliminary fund performance figures are based on change in funds’ net asset values per share during the month, and do not necessarily include end-of-month income distributions. Final performance figures will be published on www.morningstar.ca next week.

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