Purpose Core Dividend Fund March Commentary

Fund Highlights

  • Dividend yielders continued to perform well as the markets rallied risky assets on the news of the Fed taking a dovish turn with regards to further tightening in the short term. The Fund continues to outperform fifty-fifty CAD-USD peers and benchmarks.
  • The Federal Reserve’s reluctance to tighten in March caused North American markets to rally with the S&P 500 up 6.8% for the month and the TSX 60 rising +5.1% in March.
  • Canadian banks were the best-performing equities in the Fund and the only detractors from Fund performers were fertilizer giants Potash and Agrium.
  • The Fund had a tailwind from the currency hedge as the loonie recovered +4% against the U.S. dollar.
  • 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
Markets retraced higher in March with the S&P recovering almost all its year to date losses. Oil bounced off the lows in anticipation of a meeting between OPEC and non-OPEC nations to discuss production freezes. US employment numbers continued to see strength which bolstered the argument for further Fed hikes this year, however, Yellen surprised the market taking an abrupt dovish turn while citing recent financial developments in her reluctance to tighten further. As a result, the US dollar sold off broadly, credit tightened and risk assets rallied. In Canada, a poor jobs number was offset by upward surprises to retail sales and GDP. The government also announced a budget deficit plan which would include a large infrastructure spending program aimed at stimulating more growth.

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