Purpose Duration Hedged Real Estate Fund July 2016 Commentary

Fund Highlights

  • As investors hunt for yield in the face of global zero interest rates, real estate has attracted attention this year as the safe hard asset of choice for the market.
  • The Fund is up 22% for the year and investment in retail and diversified REITs has helped push Fund performance.
  • U.S. REITs outperformed their Canadian counterparts this month as the market priced out further the chances of a rate hike by the Federal Reserve in 2016, driving U.S. yield assets.
  • The Fund completed a quarterly rebalance this month, replacing 2 Canadian REIT securities.

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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