Purpose International Tactical Hedged Equity Fund April 2016 Commentary

Fund Highlights

  • Slightly negative for the month of April, the Fund hit its 1-Year anniversary in a year that has been particularly tough for international markets.
  • Down almost -10% since inception, the Fund protected downside value this year as benchmark regional indices were all severely negative for the year, all down in excess of -10%. Of particular note were Hong Kong (-25%), Europe (-16%), and Japan (-15%).
  • Materials was the best performing sector in April as energy prices and commodities rallied on supply issues and improving expectation of future demand.
  • The Fund is highly defensive (largely hedged) in Europe and Japan and is least defensive in Asia Developed and Australia.
  • In April, the Fund executed a scheduled rebalance replacing two securities each in Australia and Britain, and one security each in Asia Developed and Japan.

Market Commentary
Global markets grinded higher in April with Canadian and European equities outperforming the US. Although the IMF warned of further downside risks to growth, global economic data was largely positive this month spurring hopes for reflation. Manufacturing was stronger than expected while US payroll numbers continued to see strength. Canada surprised to the topside as retail sales and GDP figures came in better than expected. There was considerable focus on the energy meeting at Doha, however, no substantial agreement was reached on production cuts. Nonetheless, crude managed to rally almost 20% on lower inventories and a better growth outlook. Commodity cyclical and EM currencies saw significant strength vs the US dollar. The loonie rallied over 3.5% as the prospect of another BOC rate cut seeming to fade. The strength in the yen was a major focus signifying that the BOJ may have reached the limits of its monetary policy. Bonds in the US and Canada sold off from the highs, while corporate credit continued to tighten.

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