Tuesday February 17th, 2015
The Fund holds a risk-balanced portfolio diversified across agriculture, energy, base metals, precious metals, and real estate.
The Fund was positive in January. The Fund’s best sector performers were REITS, materials stocks, and precious metals positions. REITS benefitted from investor appetite for higher yielding assets as global bond yields sank lower. Precious metals rallied, with gold up 8%, in response to central bank actions seeking to devalue their currencies. Mining equities also bounced as a result.
The worst performers were crude oil, energy stocks and copper. Crude continued lower this month on the back of higher than expected inventories. Analysts called for even lower oil prices in order to stabilize production and demand imbalances. Copper fell to multi year lows on concerns of oversupply and weakening economic data from China.
Markets were volatile this month as central bank activity dominated most of the headlines. Deflation worries spurred the ECB to initiate a Euro 1.1 trillion stimulus package targeting the purchase of sovereign debt. The Bank of Canada shocked the market with a 25 bp rate cut citing recent weak economic data and concern over the negative effect of plummeting oil prices. The Swiss national bank roiled financial markets when it removed its long held peg versus the euro triggering a historic 20% move higher in the Swiss franc. This month European equity markets were the strongest performers on the back of the ECB action. U.S. markets ended down 3% and the S&P/TSX closed slightly positive. Commodities continued to experience weakness this month. The energy sell off extended lower as crude fell another 10%. Copper fell 13% to 5 year lows on declining demand and worse than expected economic data in China. Precious metals bucked the trend as gold rallied on safe haven flows. Currency markets were extremely volatile this month as central banks drove large moves. The dollar continued to see strength versus the Euro and other commodity currencies. Canada was the worst performing G10 currency falling 8.7% after the BOC’s surprise rate cut.