Purpose Core Dividend Fund January Commentary

Fund Highlights

  • Dividend yielding securities had a great month in the face of heavy declines in North American equity markets. PDF was positive as the S&P 500 index was down -4.96% for the month and the TSX-60 was down -1%.
  • As U.S. markets stumbled, Canadian equities provided plenty of upside for the Fund and the geographic diversification continued to provide better risk-characteristics relative to peers.
  • Defensive sectors continued their upward trajectory with utilities, telecom, and consumer staples providing the best returns. Energy was boosted by Peyto Exploration, which was up 22% in January on strong Fundamentals pointing towards relative outperformance in the sector.
  • Consumer Discretionary was bogged down by large automakers as the markets expected sales to taper off slowly. Ford and GM both posted record earning in early February and recouped their declines.
  • 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
2016 had a tumultuous start as markets sold off in one of the worst January performances on record. China was a catalyst as markets became unnerved by the rapid devaluation of the yuan which potentially signalled a slowdown in world’s growth engine. Oil sold off to new cycle lows touching $26 which put further pressure on commodity producing nations and exacerbated concerns of global deflation. After the Fed move in December, the market digested the prospect of another series of hikes which led to further uncertainty. Safe haven assets saw inflows as US 10yr yields sank below 2% and gold rallied 5%.

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