NexC Partners Corp. March Commentary

Fund Highlights

  • Markets soared back and recovered all year-to-date losses in March as risk assets rallied.
  • The Fed surprised the market showing reluctance to tighten further citing slowing global growth.
  • Real estate and financials were the largest contributors to performance and none of the sectors were negative.
  • Canadian equities performed well with the TSX 60 rising +5.1% in March; U.S. equities however rallied even more with the S&P 500 up 6.8% for the month.
  • Potash and Agrium were the only laggards in March whereas Canadian banks boosted Fund returns.
  • The option strategy was slightly negative for the month as equity markets rallied, increasing covered call liabilities.
  • The Fund continued to hedge U.S. dollar currency exposure maintaining a net U.S. dollar exposure of approximately 7% of the Fund’s NAV.

Market Commentary
Markets retraced higher in March with the S&P recovering almost all its year to date losses. Oil bounced off the lows in anticipation of a meeting between OPEC and non-OPEC nations to discuss production freezes. US employment numbers continued to see strength which bolstered the argument for further Fed hikes this year, however Yellen surprised the market taking an abrupt dovish turn while citing recent financial developments in her reluctance to tighten further. As a result, the US dollar sold off broadly, credit tightened and risk assets rallied. In Canada, a poor jobs number was offset by an upward surprises to retail sales and GDP. The government also announced a budget deficit plan which would include a large infrastructure spending program aimed at stimulating more growth.

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