Purpose Diversified Real Asset Fund May 2016 Commentary

Fund Highlights

  • A weaker month for real assets – energy prices increased whereas commodities and materials fell out of demand. The Fund is up 11.4% YTD, driven by a strong rebound in global demand economics.
  • Agriculture-based stocks were the best performers along with agriculture-based commodities such as soybean and soybean meal futures.
  • Metals underperformed as silver declined -10.1% and gold was down -5.9% in May.
  • Real estate assets in the U.S. were accretive to Fund performance as the market priced out the chances of a July rate hike following a weak jobs number in May.
  • The Fund continued to hedge U.S. dollar currency exposure maintaining a net U.S. dollar exposure of approximately 7% of the Fund’s NAV.

Market Commentary
Markets ended higher this month on the back of general positive sentiment. Despite numerous macro overhangs, such as possible Fed rate hikes, a weaker yuan and an impending Brexit vote markets continued to climb the wall of worry. US data was better than expected across manufacturing, retail sales and jobs which bolstered calls for a rate hike by July. Canadian GDP and trade data were worse than expected, with the negative effects of the Alberta fires yet to filter into the data. The divergent economic pictures caused the loonie to sell off 4% on the month. Commodities continued to grind higher with crude finding comfort near $50. Investment grade credit and high yield remained in the sweet spot for investors wanting to own risk while also earning an attractive yield.

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