Wednesday September 10th, 2014
Early in the month, geopolitical issues worried markets as conflict in Russia/Ukraine and Gaza continued unabated, while U.S. military action escalated in Iraq. Nonetheless, markets eventually shrugged off these concerns, and resumed dip buying which propelled U.S. and Canadian markets to all-time highs. After much fretting over the recent strength of U.S. data, payrolls came in slightly less than expected. At Jackson Hole, Yellen continued to voice concern over labour market slack, which helped calm the hawkish calls and provide a relief rally for rates. Corporate earnings for Q2 were generally positive and GDP growth figures were also solid. In Europe, weak economic activity was troubling for the recovery and spurred more calls for further accommodative action from the ECB.
In commodities, crude sank lower despite the turmoil in Russia and the Middle East. Supply overhang, coupled with declining Asian demand, were headwinds for energy prices. Gold and copper declined while grains staged a slight bounce off the lows.
In the credit markets, high yield had a dramatic bounce from July’s sell-off, as investors stepped in and bought the dip.
The U.S. dollar continued to see strength against most major currencies, however the loonie was able to buck the trend. Strong Canadian jobs data and M&A flows provided a tailwind for CAD strength during the month.
The Fund seeks to provide shareholders with long-term capital appreciation by investing in a portfolio of real estate focused equities listed in North America. The Fund aims to reduce the risk of rising interest rates associated with real estate equity securities by tactically hedging the duration of the portfolio.
The Fund was up for the month of August as all sectors were positive. The top performing sectors were specialized, diversified and retail REITs. The bottom performing sectors were industrial, residential and healthcare REITs.
The best performing stocks in the portfolio were Correction Corp of America, Geo Group and Can Real Estate Investment Trust. The worst performing stocks were Home Properties, Lexington Realty Trust and Pure Industrial Real Estate Trust.
The Fund has the ability to tactically hedge rates, but is currently not deploying an interest rate hedge in either the U.S or Canada. The Fund hedges its USD currency exposure, and is currently maintaining a net USD exposure of approximately 10% of the Fund’s NAV.