Purpose Core Dividend Fund December Commentary

Purpose Core Dividend Fund December Commentary

Fund Highlights

  • In a year of choppy markets the fund continues strongly in the space returning -2.7% for the year compared to S&P500 (+1.4%) and TSX 60 (-7.8%). The fund outperformed all peer benchmarks for year (50% CAD, 50% USD).
  • U.S. dividend yielders continue providing upside to fund returns while Canadian markets remain weak. The strategy continues to overweight Canadian securities on more attractive relative valuation.
  • Defensive sectors stayed strong through the FOMC decision with utilities, real estate, and staples providing the best returns. Vice versa, materials and Canadian banks contributed most to the downside with the Bank of Canada maintaining a dovish outlook.
  • 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

Stocks and bonds ended lower in December to close out generally choppy performance for 2015.[Add sentence or 2 on 2015 market performance for U.S. equities, Canadian Equities, MSCI EAFE (local currency) and Canadian Fixed Income and oil and gold.] The main focus this month was on the FOMC decision. After another solid U.S. job number gave the green light for “lift off” the Fed delivered by hiking rates by 0.25% for the first time in a decade. The Fed went on to assuage concerns over the pace of future hikes by promising that the path would be gradual and data consistent. In Europe, Draghi underwhelmed on the extent of rate cuts and further QE measures which sparked a sharp rally in the Euro and European yields. In Asia, Chinese growth concerns resurfaced as the central bank allowed the yuan to weaken to its lowest level in over 4 years. In commodities, oil sold off further to new lows on the year after OPEC maintained its current production rate which disappointed potential expectations for a potential supply cut. Canada traded poorly on the back of this as the loonie and the S&P/TSX both sold off to end the year.

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