Wednesday June 15th, 2016
- The upward momentum in value came to a sudden stop as growth stocks regained domination in May. The S&P 500 Pure Growth Index was up +3.64% for the month vs -0.15% for the S&P 500 Pure Value Index.
- The Fund was negative this month with deep value breaking momentum and losing ground while the broad market gained ground (S&P 500 up +1.8% in May).
- Technology was the best performing sector in May and cyclicals rebounded and energy picks took a tumble as Refining & Marketing operations took a hit on higher crude oil prices.
- With respect to the currency-hedged shares, 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.
- The non-currency hedged shares outperformed by 4% as the loonie weakened against the greenback on contrasting Fundamentals in the two countries.
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.