Purpose Monthly Income Fund November Commentary

Purpose Monthly Income Fund November Commentary

Fund Highlights

  • The Fund was negative for the month as all three asset sleeves underperformed.
  • Fixed income positions sold off in anticipation of a rise in U.S. rates led by weakness in high yield bonds.
  • Dividend equities pared back outperformance over the past two months with a weak November after experiencing heightened volatility over recent months.
  • Real assets declined on weak Fundamentals for base metal equities (First Quantum and Tech Resources). Gold Shares were the worst performing commodity in the real asset sleeve.
  • The Fund completed a quarterly rebalance, adding twelve (12) equity securities. In fixed income, the Fund increased holding in high yield bonds to 15% while decreasing investment grade corporates to 7%, and government bonds to 3%.
  • The Fund continued to hedge U.S. dollar currency exposure maintaining a net U.S. dollar exposure at approximately 7% of the Fund’s NAV.

Market Commentary

Markets consolidated after experiencing heightened volatility over the last 3 months. The terror attack in Paris and the U.S. Thanksgiving holiday gave markets time for pause, especially ahead of an event filled December where the FOMC, ECB and OPEC all have significant meetings to close out the year. In the U.S., payroll data came in stronger than expected which fueled market expectations for a December rate hike. Despite the prospect for higher rates, the yield curve flattened as the Fed signaled a “dovish hike” and a gradual rise through 2016. Canada saw sluggish economic data as cyclical sectors continued to experience a gloomy outlook with no imminent signs of easing. Commodities faced further weakness as crude and copper fell over 10% for the month. In currencies, the loonie fell 2% as the U.S. saw broad strength. European equities outperformed while the Euro sold off near the lows of the year, as markets anticipated further dovish measures from the ECB.

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