NexC Partners Corp. March Commentary

Fund Commentary

The Fund was negative in March. U.S and Canadian stock markets pulled back from the highs after rallying in February. The Fed pushed back expectations of a rate hike this year on concerns of moderating growth. This month real estate was the strongest sector as U.S. yields sank after the FOMC. Staples performed well driven by Kraft which was the most profitable holding in the portfolio after it surged higher after being acquired by Heinz.

Financials, materials and telecoms were the weakest sectors this month with Arc resources, Altria and Potash of Saskatchewan the worst performers.

The portfolio now holds 19 U.S. equities and 21 Canadian equities, and continues to hedge USD currency exposure maintaining a net USD exposure at approximately 10% of the Fund’s NAV. The Fund has not deployed leverage.

Market Commentary

North American markets stalled after rallying the previous month and ended lower in March. There was much focus on the FOMC meeting this month with many expecting a strong push for a rate hike later this year in light of continued strong job growth. As anticipated, the Fed removed the word “patient” from its statement, however there were some dovish undertones that resulted in a rally in bonds as the outlook for a potential hike was pushed back.

In commodities, oil tested new cycle lows near $40, but managed to bounce into month end on the back of rising Middle East tensions as Saudi Arabia was drawn into the conflict in Yemen.

The USD dollar continued to grind higher, especially against Eurozone currencies. CAD saw further weakness, despite rates being kept on hold, as the Bank of Canada warned of economic slowdown resulting from the shock in oil prices.

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