Purpose Diversified Real Asset Fund December Commentary

Market Commentary

December saw Bernanke’s last Fed meeting on December 18th that unveiled the tapering program. The market reacted positively to the slow pace of tapering, as U.S. equities rallied into the holidays with the DJIA and S&P hitting new highs. USD/CAD continued its upward trajectory, breaching the 1.07 level by month end. Precious metals sold off again this month. Gold was down approximately 3.75%, and silver was down almost 2.75%, with gold equities performing poorly as investors unwound their holdings. On the other hand, base metals performed well in December as copper was up 1.78%. Looking ahead to 2014, there is improving economic data, along with the likelihood of a U.S. budget deal early in the year. This should point towards higher equity markets, strengthening USD versus CAD and weaker commodity markets. We expect commodities to remain pressured until we see growth signals from China or higher inflation forecasts.

Fund Commentary

The Fund holds a risk-balanced portfolio diversified across agriculture, energy, base metals, precious metals, and real estate. The Fund had positive performance this month as a rebound in agriculture, energy, base metals and real estate sectors helped offset losses in the Fund’s exposure to precious metals. Base metals were the best performing asset class as copper was up 1.78% along with base metal equities. In the agriculture sector, equities outperformed the underlying commodities which resulted in a positive month for the sector even as soy was down 5.65% and corn declined 5.5%. Real estate investment trusts were volatile during the month of December in expectation of the December 18th U.S. Fed decision on tapering. The sector rallied after the announcement, ending the month in positive territory. In the precious metals sector, equities outperformed the underlying commodities as gold and silver continued their downward trend again this month.

The Fund was also approved to hold Purpose High Interest Savings (TSX: PSA) in lieu of cash, and now holds the majority of its cash in PSA. The Fund declared an annual dividend of $0.098/share in its ETF and F Series and $0.05/share in the A Series.

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