Purpose Best Ideas Fund November Commentary

Purpose Best Ideas Fund November Commentary

Fund Highlights

  • The Fund was negative for the month, with downside pressure on a number of positions, as large-capitalization stocks and growth stocks underperformed their counterparts.
  • Small-caps made a come-back in November with the Russell 2000(small-cap index) rallying +3.3% vs +0.3% for the S&P500. However, YTD large-cap stocks have carried the markets with S&P 500 up +3% and Russell 2000 up only +0.6%.
  • Growth stocks have outperformed value YTD, with Russell 1000 Growth up +7% vs -2% for Russell 1000 Value. PBI’s large-cap and growth beta tilts have helped the Fund perform well in the face of choppy markets.
  • CBS was the largest positive contributor this month on the back of strong quarterly results and commitment to its stock buyback program.
  • Largest detractor this month was SunEdison, which continues to experience negative pressure due to concerns on debt repayments from committed M&A activity, and recent analyst downgrades.
  • September’s quarterly 13F forms were filed mid-November, and based on the updated information five (5) stocks were replaced within the portfolio. Newly added names were Amazon.com Inc., Bank Of New York Mellon Corp, Cheniere Energy Inc., PayPal Holdings Inc. and Time Warner Cable.
  • With respect to the currency hedged shares, the Fund continued to hedge U.S. dollar currency exposure maintaining a net U.S. dollar exposure at approximately 7% of 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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