Purpose Best Ideas Fund June Commentary

Fund Highlights

  • The Fund was negative in June similar as the broader U.S. equity markets.
  • The best performing sectors were financials and health care, while technology, consumer discretionary and industrials were the worst performing ones.
  • HCA Holdings was the most profitable holding during June. Hospitals led a rally across health care companies after the U.S Supreme court upheld a key piece of Obamacare which had been an overhang for the industry. The court decision ensured that nationwide tax subsidies would keep flowing to people helping them to afford health insurance. HCA, the largest for-profit hospital chain would benefit from a continued influx of fee paying customers.
  • Micron was the worst performer this month. It saw a sharp decline after missing earnings estimates. The company also issued a disappointing sales outlook that it blamed on weakening demand for PC components.
  • With respect to the currency hedged shares, the Fund continued to hedge its U.S. dollar currency exposure maintaining a net U.S. dollar exposure at approximately 10% of the Fund’s NAV.

Market Commentary

Markets ended lower this month as global geopolitical risks weighed on risky assets. Greece was an overhang on the Eurozone as probability rose that it would default on IMF loans due at the end of the month. The Greek government also shut down local banks and called a surprise referendum which heightened uncertainty. In the U.S. , jobs data came in stronger than expected which put the U.S. Fed on a path to raise interest rates later this year. However, despite the dovish FOMC comments U.S. bond yields continued higher causing volatility across interest rate sensitive assets. In Canada, economic data was mixed as better than expected jobs numbers were offset by weaker GDP and retail sales. This soft data renewed concerns of recession and bolstered calls for further rate cuts from the Bank of Canada.
Commodities were mixed. Energy drifted lower led by Brent oil and heating oil. Grains saw a large move higher as wet weather conditions and bullish USDA reports drove short covering across the complex.
Currency markets were choppy this month as the U.S. dollar took a pause in its upward trajectory ending lower this month. Euro had large swings driven by the uncertainty in Greece, while the CAD dollar closed slightly higher.

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