Thursday October 16th, 2014
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 seeks 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 down in September with all sectors finishing negative. The worst performing sectors were diversified, hotels and office property.
The best performing stocks in the portfolio were Geo Group, Can Real Estate and Milestone Apartments. The worst performers were Rayonier, Hospitality Properties and Home Properties.
The Fund continues to have no interest rate hedge in U.S and Canadian 10 year treasury notes. The Fund hedges its USD currency exposure, maintaining a net USD exposure of approximately 10% of the Fund’s NAV.
Geopolitical concerns in Russia/Ukraine and the Middle East continued to overhang markets this month. Pro-democracy protests in Hong Kong and an independence referendum in Scotland also contributed to the general sense of unease. Economic data pointed towards slowdown in China, and European data was also sluggish. In response, the PBOC added liquidity to support China’s 5 largest banks, while the ECB made a surprise rate cut and added almost $1tr in stimulus in an attempt to fend off deflationary pressures. Canadian markets fell on weakness experienced across cyclical commodity sectors. The US continued to diverge from other developed nations and posted a strong Q2 GDP, as well as improving economic activity. Speculation over the path of future US interest rate hikes continued to weigh on investors’ minds.
Commodities experienced heavy selling this month as the S&P GSCI closed down 6%. The combination of supply overhang, weak Chinese demand and a strong US dollar saw negative performance across grains, metals and energy.
The US dollar had another month of strong gains. The diverging interest rate and growth outlook between the US and other developed countries saw the US dollar appreciate against every G10 currency. The loonie fell 3% this month to 1.1200.