Greater China equity mutual funds was the best-performing category in Canada in March with an average 13-per-cent jump, closely followed by others invested in financial services, emerging markets and precious metals.
But all investment fund categories - whether those owning stock or bonds - ended up in positive territory, according to preliminary figures released by Globefund.
China-related stocks, which have rallied despite a global financial crisis and economic slowdown, have also helped Asia Pacific ex-Japan funds climb an average of nearly 10 per cent last month. Asia Pacific equity funds rose an average of 4.8 per cent.
"The Chinese financial system is much stronger than their overseas counterparts," Eric Yan, a portfolio fund manager with Mavrix Fund Management Inc., said yesterday in an interview. "The banking system is pretty healthy and has no liquidity issues."
China's stimulus package is now taking hold through infrastructure investments, while domestic loan growth is also expanding at a rapid rate, said Mr. Yan, who runs an Asia Pacific equity fund.
"Today's loans will turn into tomorrow's production, and will help the Chinese economy."
The Shanghai composite index surged more than 30 per cent for the first three months of 2009. The Shanghai stock market rally stems from optimism that growth in the country for the first quarter could be in the higher 5-per-cent to 6-per-cent annualized range, as opposed to consensus of about 3 per cent to 5 per cent, while manufacturing activity has been growing since last November's bottom, Mr. Yan suggested.
Financial services funds, meanwhile, rose an average of nearly 12 per cent, while emerging markets and precious metals funds climbed an average of 11 per cent.
The financial services funds, which are mostly invested in global and particularly U.S. stocks, got a lift from government stimulus packages to revive the ailing banking and insurance sector, said Dan Hallett, an independent fund analyst who is based Windsor, Ont.
With the emerging markets funds, "China is a big part of that," with investors hoping that the Chinese economy is still growing, albeit at a slower rate, Mr. Hallett said.
"It's a sharp contrast to what is happening globally, where [major] economies are not growing at all for the moment."
Precious metals funds, which invest mainly in gold company stocks, also continued to shine last month. For the first quarter of this year, it is also the best-performing category, with nearly a 20-per-cent return. During the month, "you saw some weakening of the U.S. dollar, which would be positive for precious metals funds," Mr. Hallett said.
|Top 10 fund categories in March|
|Group Avg.||Group Avg.|
|TOP 10||1-mo. % Rtn||3-mo % Rtn|
|Greater China Equity||12.7%||3.9%|
|Financial Services Equity||11.7%||-15.6%|
|Emerging Markets Equity||11.0%||0.1%|
|Precious Metals Equity||10.8%||19.8%|
|Asia Pacific ex-Japan Equity||9.6%||-0.7%|
|Science and Technology Equity||9.3%||3.4%|
|Natural Resources Equity||8.6%||4.8%|
|Canadian Inflation Protected Fixed Income||8.3%||3.9%|
|U.S. Small or Mid Cap Equity||7.4%||-7.9%|
|Average for all funds regardless of asset class||4.8%||-3.6%|
|S&P 500 Composite||8.5%||-11.7%|
|S&P/TSX Composite Index||7.4%||-3.0%|
© 2007 The Globe and Mail. All rights reserved.
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