Purpose Diversified Real Asset Fund July 2016 Commentary

Fund Highlights

  • Mixed performance for the month. Real assets experienced positive contributions from base metals and real estate sleeves and a drag on the Fund caused by agricultural commodities.
  • Metals and real estate both performed well as investors continued to flock to safety and yield providing assets following concerns over Brexit and slowing global growth.
  • Agriculture based equities performed well and accretively for the Fund, however agricultural commodities were detractors as concerns over various supply issues faded from North American markets.
  • The Fund has experienced a steep rally in 2016 with low correlation to the S&P500 of only 0.6.

Market Commentary
July saw a continuation of a post Brexit relief rally. Although the outcome for European growth was likely long term negative, short term flows outweighed those concerns as investors needed to put money to work. Equities rallied higher with the S&P making new all -time highs, while European markets recovered higher. With central banks keeping rates at exceptionally low levels, the hunt for yield was heightened as investment grade and high yield credit rallied. Commodities experienced weakness led by the energy complex. Crude prices sank over $10 on concerns of a supply glut. As a result, commodity cyclical currencies also saw weakness. Slack Canadian economic data and worries over a housing bubble were additional headwinds for the loonie this month.

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