Purpose Core Dividend Fund October Commentary

Fund Highlights

  • The Fund performed strongly this month, recovering the losses incurred through the year as global markets rallied on the back of the U.S. Fed’s decision to delay a rate increase.
  • Dividend yielding securities in the U.S. once again outperformed their counterparts in Canada. The U.S. securities market has outperformed Canada by approximately 700 bps YTD. The Fund continues to overweight exposure to Canadian securities which are deemed relatively inexpensive.
  • Cyclical sectors came back into play this month as energy and materials rallied around oil and commodity prices.
  • Las Vegas Sands was the best performing name this month as the company raised dividends. Utilities holdings were the worst performers as the market searched for aggressive gains.
  • 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

Global markets rebounded higher in October retracing most of the losses seen in the August correction. The primary catalyst for the move higher in markets was the lowering of expectations for a Fed hike in 2015, as the FOMC remained on hold in October. Sentiment appeared to shift positive despite a global economic backdrop which continued to look weak. In the US, retail sales and ISM trended lower while payrolls disappointed to the downside. Canada saw a majority Liberal victory as well as slightly positive Q3 GDP, however the Bank of Canada remained neutral continuing to downplay the outlook for the economy. European and UK PMI’s were weak, while China reported a slowdown in import activity.

This month there was considerable short-covering across the commodity cyclical complex. Crude oil rallied higher while equities were led higher by energy and materials. Emerging market currencies which were overextended to the downside the previous month were able to recover significantly in October. The CAD dollar rallied 1.8% on the back of a majority Liberal victory and stronger oil prices.

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