Wednesday June 15th, 2016
- Positive for the month, the Fund gained from positions in the technology sector; Alphabet, Apple, and Microsoft were all back in the green this month after reporting disappointing earnings and declining in April.
- Overweight position in the industrials sector was accretive to Fund performance whereas selection in energy was detractive.
- Cheniere Energy declined -17% on weak earnings and bearish statements from short-seller Jim Chanos. It is interesting to note that Cheniere Energy, which is held long by 4 managers of the followed universe is also the target of a short-strategy by a high–profile manager.
- Last month, Charter Communications acquired Time Warner and as both securities were held in the Fund, the weighting was trimmed in half to dilute excessive concentration.
- There was a scheduled rebalance of the Fund in May and three securities were replaced with the noticeable inclusion of Facebook in the additions.
- With respect to the currency-hedged shares, 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.
Markets ended higher this month on the back of general positive sentiment. Despite numerous macro overhangs, such as possible Fed rate hikes, a weaker yuan and an impending Brexit vote markets continued to climb the wall of worry. US data was better than expected across manufacturing, retail sales and jobs which bolstered calls for a rate hike by July. Canadian GDP and trade data were worse than expected, with the negative effects of the Alberta fires yet to filter into the data. The divergent economic pictures caused the loonie to sell off 4% on the month. Commodities continued to grind higher with crude finding comfort near $50. Investment grade credit and high yield remained in the sweet spot for investors wanting to own risk while also earning an attractive yield.