Purpose Diversified Real Asset Fund June Commentary

Fund Highlights

  • The Fund was negative in June. Equity holdings in REITs, energy and base metals were the worst performers. Commodity positions were positive driven by exposure to the agriculture sector.
  • Soybean and soybean meal futures spiked higher as the market experienced extensive short covering after poor weather conditions dampened the outlook for crop yields.
  • The Fund rebalanced its commodity positioning replacing cotton and live cattle with lean hogs. The Fund also rebalanced one equity positon by deleting Alamos Gold.

Market Commentary

Markets ended lower this month as global geopolitical risks weighed on risky assets. Greece was an overhang on the Eurozone as probability rose that it would default on IMF loans due at the end of the month. The Greek government also shut down local banks and called a surprise referendum which heightened uncertainty. In the U.S. , jobs data came in stronger than expected which put the U.S. Fed on a path to raise interest rates later this year. However, despite the dovish FOMC comments U.S. bond yields continued higher causing volatility across interest rate sensitive assets. In Canada, economic data was mixed as better than expected jobs numbers were offset by weaker GDP and retail sales. This soft data renewed concerns of recession and bolstered calls for further rate cuts from the Bank of Canada.
Commodities were mixed. Energy drifted lower led by Brent oil and heating oil. Grains saw a large move higher as wet weather conditions and bullish USDA reports drove short covering across the complex.
Currency markets were choppy this month as the U.S. dollar took a pause in its upward trajectory ending lower this month. Euro had large swings driven by the uncertainty in Greece, while the CAD dollar closed slightly higher.

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