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Mutual Fund News

Fixed income funds gain, but China loses

INVESTMENT FUNDS REPORTER

Precious metals and greater China equity funds got spanked in January, while fixed-income and Japanese equity funds made money.

Funds in the precious metals equity category, which gained an average of 72 per cent in 2009, shed an average of nearly 7 per cent last month, according to preliminary figures released by Globe Investor.

Precious metals equity funds, which invest mainly in gold stocks and/or bullion, fell into the red as the price of the yellow metal retreated when the U.S. dollar rallied due to stronger economic data.

Gold futures for February delivery in New York fell to $1,083 (U.S.) per ounce at the end of last month. The metal has backed off from a record high above $1,200 in December.

Middlefield Precious Metals Class, Altamira Precious & Strategic Metal and PowerShares Global Gold and Precious Metals Class all lost over 11 per cent in January.

Greater China equity funds also lost an average of nearly 7 per cent last month. Chinese stocks fell amid concerns about Beijing's steps to withdraw excess cash from the financial system to rein in an over-heating economy. In January, the Shanghai composite index fell by 8.8 per cent.

China's moves, which included raising bank reserve requirement ratios to drain excess liquidity, has prompted worries that the steps to tighten liquidity could spread to higher interest rates.

The biggest losers were the U.S.-dollar versions of the greater China funds. Excel China Fund lost 9.2 per cent, while AGF China Focus Class shed 8.7 per cent and Fidelity China fell 8.3 per cent.

The star performers in January were fixed-income funds. The Canadian long-term fixed-income category gained an average of 3 per cent, while Canadian fixed-income and high-yield fixed-income funds rose an average of 1.8 per cent.

The SEI Long Duration Bonds were at the top of its group last month, climbing between 3.5 per cent and 3.7 per cent, depending on the version. MB Long-term Fixed Income Fund was the top performer in the Canadian fixed-income group, rising 2.8 per cent among those investments that have reported January's returns. Chou Bond climbed to the top of the high-yield fixed-income group with a 5.1-per-cent gain.

Japanese equity funds racked up an average return of 2.9 per cent last month. Investors Japanese Equity Class rose to the top of this group with a 4.7-per-cent gain.

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Best and worst fund categories in January

Group Avg. Group Avg.
TOP 5 1 mo. Rtrn 2009
Canadian Long Term Fixed Income3.0%1.6%
Japanese Equity2.9%-6.0%
Canadian Fixed Income1.8%6.2%
High Yield Fixed Income1.8%27.5%
Global Fixed Income1.7%-1.3%
BOTTOM 5
Precious Metals Equity-6.9%71.5%
Greater China Equity-6.8%41.1%
Financial Services Equity-5.0%31.2%
Science and Technology Equity-5.0%36.5%
Canadian Equity-4.9%32.2%
Average for all funds regardless of asset class -2.0% 19.3%
S&P 500 Composite-3.7%23.5%
S&P/TSX Small Cap-3.2%56.2%
S&P/TSX Total Return-5.3%35.1%
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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