Purpose Core Dividend Fund November Commentary

Fund Commentary

The Fund was positive in November. This month consumer names and financials performed well while cyclical commodity related names were sold. The best performing sectors were staples, consumer discretionary, and financials while energy, materials and industrials were the worst.

The best performing stocks were George Weston, Shaw and Rogers. George Weston announced a 24% increase in adjusted earnings which was ahead of consensus. Strong performance from Loblaws which was boosted by the acquisition of Shoppers Drug Mart, helped the company beat expectations this quarter. Canadian telcos saw a strong bid this month which was reflected in Shaw and Rogers. The forecast for growing dividends, steady revenue growth and the prospect for improving wireless performance helped push the sector higher.

The Fund’s worst performing stocks were Pembina Pipeline, Lyondellbasell and Finning. The energy sector continued to face major headwinds this month as the price of oil plummeted. Pembina Pipeline was caught in the downdraft, in addition it announced earnings which were slightly lower than consensus. Lyondellbasell fell in tandem with crude prices, as its perceived cost advantage over other ethylene producers was whittled away. Finning’s exposure to mining construction, including oil sands in Western Canada, was viewed negatively as declining commodity prices would impact its customer’s capital expenditures.

The Fund completed its quarterly rebalance adding BCE, Bombardier and H&R Real Estate REIT, while removing Canadian Oil Sands, Ingredion and Taubman Centers. The portfolio holds 18 U.S. equities and 22 Canadian equities, and continues to hedge USD currency exposure maintaining a net USD exposure at approximately 10% of the Fund’s NAV.

Market Commentary

Stocks moved higher this month. In the U.S., generally strong data continued to support a positive economic outlook for 2015, and widen the economic gap between the U.S. and other developed countries. Conversely, Japan and Europe saw weakening economic data which prompted the BOJ and ECB towards even more aggressive stimulus measures in order to fend off deflationary pressures. In addition, the Bank of China unexpectedly cut rates to improve liquidity sending global stocks higher. Commodities were under pressure all month highlighted by an 18% plunge in crude prices. The end of month OPEC meeting was pointed to as a potential catalyst for stemming the fall in prices; however OPEC kept its production ceiling unchanged escalating its price war with other oil producing nations. The U.S. dollar pushed higher this month in particular against the Japanese Yen and currencies from commodity exporting nations. The loonie sold off in tandem with oil prices as USD/CAD closed at the year highs above 1.1400.

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