Skip navigation

Mutual Fund News

Financial funds advance as U.S. reform fears subside

INVESTMENT FUNDS REPORTER

Financial services equity funds rose to the top of the performance heap in March after investor concerns over tough U.S. financial reform subsided and bank stocks in Canada also rallied strongly.

The group rose an average of 6.1 per cent last month, led by AIC American Advantage with a gain of 7.9 per cent (11.8 per cent in its U.S.-dollar version). The BMO S&P/TSX Equal Weighted Banks Index exchanged-traded fund rose 7.4 per cent.

In the United States, financial services stocks continued their climb last month from late February.

The sector had taken a beating earlier on concerns about the potential impact of tough new financial services proposals. One proposition, which has been dubbed the "Volker rule," is designed to limit proprietary trading and increase government supervision and powers.

"I call it the fear around overreaching and inappropriate financial reform," Greg Placidi, co-manager of AIC American Advantage, said yesterday.

"One by one, the bear argument started going away.

"It looked like financial reform was not going to be as draconian as originally thought," and the Volker rule wasn't suddenly going to be implemented and destroy Goldman Sachs and Morgan Stanley overnight, he said.

But AIC American Advantage did well did in March because of an overweight position in U.S. life insurance stocks, he said. MetLife Inc., Hartford Financial Services Inc. and Prudential Financial Inc., which represent 18 per cent of the fund, were big movers.

Because Canada has posted strong economic growth numbers recently, the domestic banks have been a way for foreign investors to play this country, Mr. Placidi said.

"Canadian banks have had a lot of demand on their shares."

***

Top fund classes for March

Group Average for all asset classes as of March 31, 2010
Group Avg. Group Avg.
Top 5 1 mo. return YTD return
Financial Services Equity6.1%2.4%
Emerging Markets Equity5.3%0.1%
Canadian Dividend and Income Equity4.0%3.8%
Asia Pacific ex-Japan Equity4.0%-1.7%
Global Small/Mid Cap Equity3.8%2.2%
Bottom 5
Global Fixed Income-2.2%-1.1%
Canadian Short Term Fixed Income-0.7%0.3%
Canadian Fixed Income-0.6%1.2%
Canadian Long Term Fixed Income-0.2%2.5%
U.S. Money Market0.0%0.0%
Average for all funds regardless of asset class2.2%1.5%
S&P 500 Composite ($ Cdn)2.2%1.8%
S&P/TSX Small Cap3.2%4.2%
S&P/TSX Total Return3.8%3.1%
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

Search Fund News


Advanced Search

GlobeinvestorGOLD.com

Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.

Discover a wealth of investment information and and exclusive features.

Free E-Mail Newsletters

  • Morning news headlines
  • Morning business headlines
  • Financial highlights
  • Tech alert
  • Leisure

Sign-up for our free newsletters



Back to top