Purpose Diversified Real Asset Fund December Commentary

Purpose Diversified Real Asset Fund December Commentary

Fund Highlights

  • The Fund was negative for the month driven by weakness in Canadian equities and the global energy rout.
  • As OPEC maintained current production levels, further pressure was sustained on the energy complex.
  • Precious metals and related equities were the best performers this month on the back of safe haven flows. Cyclical equities across energy, agriculture and metals were the worst performers.
  • In commodities, long soy positons were under pressure from an increase in global exports.
  • This month the Fund added Senior Housing Properties and Hospitality Properties in the real estate segment. The Fund also deleted wheat positions from commodity exposure.
  • The Fund continues to hedge U.S. dollar currency exposure maintaining a net U.S. dollar exposure of approximately 7% of the Fund’s NAV.

Market Commentary

Stocks and bonds ended lower in December to close out generally choppy performance for 2015.[Add sentence or 2 on 2015 market performance for U.S. equities, Canadian Equities, MSCI EAFE (local currency) and Canadian Fixed Income and oil and gold.] The main focus this month was on the FOMC decision. After another solid U.S. job number gave the green light for “lift off” the Fed delivered by hiking rates by 0.25% for the first time in a decade. The Fed went on to assuage concerns over the pace of future hikes by promising that the path would be gradual and data consistent. In Europe, Draghi underwhelmed on the extent of rate cuts and further QE measures which sparked a sharp rally in the Euro and European yields. In Asia, Chinese growth concerns resurfaced as the central bank allowed the yuan to weaken to its lowest level in over 4 years. In commodities, oil sold off further to new lows on the year after OPEC maintained its current production rate which disappointed potential expectations for a potential supply cut. Canada traded poorly on the back of this as the loonie and the S&P/TSX both sold off to end the year.

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