mardi 10 mars 2015
The Fund aims to provide returns in excess of broad U.S. equity markets by investing in a portfolio of fundamentally selected US listed equities. The Fund employs leverage to increase its long portfolio exposure and hedges the increased market risk associated with the leveraged portion of the portfolio with index futures.
PEU was positive in February. US markets rebounded from January declines as geopolitical concerns seemed to diminish. U.S. economic data continued to show sign of strength, and corporate earnings were generally positive. All sectors were positive this month. A rebound in oil prices helped lift cyclical commodity holdings, as a result energy, materials and industrials were the strongest sectors in February. SM Energy, ON Semiconductor and Freeport McMoran were the best performing names, while Bunge, Guess and Tidewater were the worst performers.
The Fund completed a monthly rebalance, turning over 25 names in the portfolio. The new additions were AOL, Arrow Electronics, Avnet, American Axle& Mfg, Cardinal Health, Cameron, Chicago Bridge & Iron, Cabot, Cummins, Community Health Systems, Delek, Devry, Fluor, Helmerich & Payne, Johnson & Johnson, Lifepoint, Macy’s, Mckesson, NCR, National Oilwell Varco, Oceaneering, Rowan, Seadrill, Spectrum Brands and Terex. The deletions were Aetna, Cal-maine, Carpenter Tech, Deere, Denbury Resources, Group 1 Automotive, Chart Industries, Juniper, Kennametal, Manpowergroup, Murphy Oil, Netapp, ON Semiconductor, PBF Energy, Pfizer, Parexel, SM Energy, AT&T, Tidewater, Tenneco, Tenet Healthcare, Tupperware Brands, UnitedHealth, Unit, and Whiting Petroleum.
The Fund is levered by approximately 25% and has an offsetting short futures hedge of approximately 25%.
The Fund continued to hedge its USD currency exposure maintaining a net USD exposure at approximately 10% of the Fund’s NAV.
Markets rebounded higher in February with dip buyers emerging on waning geopolitical concerns and optimism on the global growth outlook. Concerns over Greece’s ability to meet its fiscal pledges receded as bailout provisions were extended by the ECB. Generally positive U.S. earnings, strong jobs data and supportive Fed comments helped the S&P close up 5.7% on the month. European equities outperformed other developed markets as inflows increased on the back of the ECB’s supportive actions from the previous month. U.S. 10 year yields squeezed quickly back above 2% as safe haven demand declined, and the market began to price in a higher probability of a June rate hike.
In commodities, oil managed to recover off the lows with prices buoyed by news of cuts in production and the potential for supply disruption in the Middle East. Gold gave back its January gains retreating lower as safe haven demand declined.
The U.S. dollar continued to exhibit selective signs of strength notably against Japanese yen, Swiss Franc and emerging market currencies. CAD was able to recover higher buoyed by signs of oil recovery and better than expected trade deficit numbers. However, the BOC’s recent dovish comments continued to provide an overhang on the loonie with further rate cuts expected in the coming months.